QUESTION TIRER (?) a) What is the difference between entering into a long forward contract when the forward price is $50 and taking a long position in a call option with a strike price of $50? b) Suppose GOLD JUN 2022 futures is currently trading at $73.30 per ounce. One contract size is 100 ounces. The initial margin is $5,000, while the maintenance margin is 90% of the initial margin. It is 2/4/2024, you go short in two GOLD JUN 2024 futures (2 contracts). Table 1: Margin account Futures Margin Price Gain/ Cumulative Account Margin Date (S/oz) Loss Gain/Loss Call 2/4/2024 73.30 3/4/2024 76.45 6/4/2024 76.55 7/4/2024 77.56 8/4/2024 79.21 9/4/2024 84.56 83.67 10/4/2024 Source: Constructed by the examiner. Complete the margin account above and discuss the impact of the daily closing prices below on your position in the oil futures and determine the profit or los made if you close your position on 10/4/2024.
QUESTION TIRER (?) a) What is the difference between entering into a long forward contract when the forward price is $50 and taking a long position in a call option with a strike price of $50? b) Suppose GOLD JUN 2022 futures is currently trading at $73.30 per ounce. One contract size is 100 ounces. The initial margin is $5,000, while the maintenance margin is 90% of the initial margin. It is 2/4/2024, you go short in two GOLD JUN 2024 futures (2 contracts). Table 1: Margin account Futures Margin Price Gain/ Cumulative Account Margin Date (S/oz) Loss Gain/Loss Call 2/4/2024 73.30 3/4/2024 76.45 6/4/2024 76.55 7/4/2024 77.56 8/4/2024 79.21 9/4/2024 84.56 83.67 10/4/2024 Source: Constructed by the examiner. Complete the margin account above and discuss the impact of the daily closing prices below on your position in the oil futures and determine the profit or los made if you close your position on 10/4/2024.
Chapter11: Managing Transaction Exposure
Section: Chapter Questions
Problem 56QA
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Question
Transcribed Image Text:QUESTION TIRER (?)
a) What is the difference between entering into a long forward contract when the
forward price is $50 and taking a long position in a call option with a strike price
of $50?
b) Suppose GOLD JUN 2022 futures is currently trading at $73.30 per ounce. One
contract size is 100 ounces. The initial margin is $5,000, while the maintenance
margin is 90% of the initial margin. It is 2/4/2024, you go short in two GOLD
JUN 2024 futures (2 contracts).
Table 1: Margin account
Futures
Margin
Price
Gain/
Cumulative Account
Margin
Date
(S/oz)
Loss
Gain/Loss
Call
2/4/2024
73.30
3/4/2024
76.45
6/4/2024
76.55
7/4/2024
77.56
8/4/2024
79.21
9/4/2024
84.56
83.67
10/4/2024
Source: Constructed by the examiner.
Complete the margin account above and discuss the impact of the daily closing
prices below on your position in the oil futures and determine the profit or los
made if you close your position on 10/4/2024.
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