A speculator believes that the price of oil will rise during the next seven months. On...

 

Transcribed Image Text:

A speculator believes that the price of oil will rise during the next seven months. On February 3, 2022, she takes a speculative position in five NYMEX September 2022 Light Sweet Crude Oil futures contracts (CME Group). The futures price at which the speculator enters the contract is $57.97 per barrel. The initial margin is $9,375 and the maintenance margin is $7,500. (Note that you must determine whether the speculator should be long or short in the contract based on her stated expectations.) Assuming that the margin account was fully funded when the position was first opened, which is the first price which would lead to the trader being able to withdraw $5290 from the margin account? Note that the account covers five contracts. A speculator believes that the price of oil will rise during the next seven months. On February 3, 2022, she takes a speculative position in five NYMEX September 2022 Light Sweet Crude Oil futures contracts (CME Group). The futures price at which the speculator enters the contract is $57.97 per barrel. The initial margin is $9,375 and the maintenance margin is $7,500. (Note that you must determine whether the speculator should be long or short in the contract based on her stated expectations.) Assuming that the margin account was fully funded when the position was first opened, which is the first price which would lead to the trader being able to withdraw $5290 from the margin account? Note that the account covers five contracts.

Answer rating: 100% (QA)

To determine the first price that would allow the speculator to withdraw 5290 from the margin accoun... View the full answer