1.You decide that, given your love of bacon, you want to start profiting from it.You discover that...
Question:
1.You decide that, given your love of bacon, you want to start profiting from it.You discover that you can trade in "lean hogs" futures.You find that these futures trade on the Chicago Mercantile Exchange (CME).Information on lean hogs futures contracts is at the following website:
https://www.cmegroup.com/markets/agriculture/livestock/lean-hogs.html
Click on the links underneath the "Lean Hogs Futures" text to find information on quotes, contract specifications, and margins (you'll need to search under the CME and Agricultural filters to find the margins for this contract).
a)You enter your position on Monday at the closing price of 82.00.You enter into 5 contracts.You invest the minimum amount of funds for the initial performance margin.You do not withdraw any increases to your margin account.The following week has the following futures price changes:
Date
Closing price
Tuesday
82.59
Wednesday
83.41
Thursday
81.21
Friday
80.31
Calculate the daily amount in your margin account (after daily gains/losses), and any subsequent margin calls that you might have to make.
b)You reverse your position on Friday at the closing price. What was your gain/loss from the position?
Corporate Finance
ISBN: 978-0071339575
7th Canadian Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Ro