Bilibili Inc (BILI) is an internet gaming company in China. Bear Fitchel and his grandson, Bull Fitchel were discussing BILI's stock value. Bear doesn't understand why people like online gaming and so thinks that BILI is overvalued. Bull likes the games they host and thinks the company is going to grow quickly. On November 12th, 2021 Bear short sold 100 shares of BILI and Bull bought 100 shares on margin. On January 21st, 2022 they each closed their positions.

Assume that the initial margin requirement is 0.50 and the maintenance margin requirement is 0.25.
You may ignore the rebate and any fees for borrowing the stock
Assume all trading occurred at the adjusted close price posted on finance.yahoo.com
 

What is the minimum amount of cash that Bear and Bull each had to have deposited in their account to make the trade?
At what price would Bear and Bull get a margin call?
Did either Bear or Bull get a margin call? If so, on which day?
Please draw both Bear's and Bull's payoff and profit diagrams.
What was Bear's profit and Bull's profit when they closed their positions?
 

 

On January 10th, 2022 Penny and Nicole entered into a single futures contract for May deliver of crude oil (Ticker CLK2, or CLK22.NYM). Penny took a short position and Nicole took a long position. January 14th, 2022 they each closed their positions.

The daily interest rate on margin is the corresponding 1-month treasury rate divided by 250.
The initial margin requirement is 5% of the contract notional value
The maintenance margin is 4% of the contract notional value
Assume all transactions occur at the close price
 

How many barrels of oil does each contract cover?
What did it cost Penny to enter into the contract? What did it cost Nicole?
How much initial margin did Penny and Nicole each have to post?
Please show the daily mark to market balances for both Penny and Nicole for each day of their positions.
Did either Penny or Nicole get a margin call? If so when?

Answer rating: 100% (QA)

Solution To determine the minimum amount of cash that Bear and Bull each had to have deposited in their account to make the trade we need to calculate the initial margin requirement and the maintenanc... View the full answer