Question

1.A T-note futures contract has a face value of $100,000, currently it is priced at 109’12. The initial margin is 1,620, and maintenance margin is $1,200. Jack longs one T-note futures contract and Kathy shorts one T-note futures contract. Three months later, the T-note futures contract price decrease to 108’14. Who will get a margin call, by how much?

Answer 1

T-note futures contract price has decreased from 109.12 to 108.14. So, Jack who is long one contract gets the margin call.

Loss amount = (109.12 - 108.14)*100,000/100 = $980

Jack's margin account after three months = Initial balance - Loss amount

Jack's margin account after three months = 1,620 - 980

Jack's margin account after three months = $640

Maintenance margin is $1,200

Margin call amount = Maintenance margin - Jack's margin account after three months

Margin call amount = 1,200 - 640

Margin call amount = $560