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Suppose a few days ago you sold a silver futures contract at $18 per ounce. Each...

Suppose a few days ago you sold a silver futures contract at $18 per ounce. Each contract covers 5,000 ounces. The initial margin of the contract is $1 per ounce and the maintenance margin is $0.07. The settlement prices of the past four days were $17.945, $17.948, $17.920, and $17.970. Today’s settlement price is $17.983.

a. What is the value of the contract (to you) before it is marked-to-market?

b. What is the value of contract after it is marked-to-market?

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Answer #1

Note: Contract Value = Lot size * latest settled futures price

Latest Account Value = Previous days' account value + Marked to market (loss/gain)

  

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