The futures price of gold is $1,250. Futures contracts are for 100 ounces of gold, and the margin requirement is $5,000 a contract. The maintenance margin requirement is $1,500. You expect the price of gold to rise and enter into a contract to buy gold.
a) How much must you initially remit?
b) If the futures price of gold rises to $1,255, what is the profit and percentage return on your position?
c) If the futures price of gold declines to $1,248, what is the loss and percentage return on the position?
d) If the futures price falls to $1,238, what must you do?
e) If the futures price continues to decline to $1,210, how much do you have in your account?
f) How do you close your position?