You have $50,000 in a futures account and are speculating in crude oil futures. The contract unit for an oil future is 1000 barrels of crude oil. The maintenance and original margin for crude oil futures (for the purposes of this problem) is $5000.
1. You sell 2 oil futures at 50. (Your position is SHORT 2 futures). What is your: Account value, amount required for margin, cash balance.
2. Oil drops from 50 to 48. What is your: Account value, amount required for margin, cash balance.
3. You sell another oil future (you are now short 3 futures) at 48. What is your: Account value, amount required for margin, cash balance.
4. Oil drops further from 48 to 45. What is your: Account value, amount required for margin, cash balance.
5. You sell another oil future (you are now short 4 futures) at 45. What is your: Account value, amount required for margin, cash balance.
6. Oil drops to 40. What is your: Account value, amount required for margin, cash balance.
7. You take profit on 2 futures (You buy 2 futures so you are now short only 2 futures.) What is your: Account value, amount required for margin, cash balance.
8. Oil rallies to 45. What is your: Account value, amount required for margin, cash balance.
9. You withdraw all the cash you are allowed to withdraw. How much do you withdraw?
10. Oil rallies to 47. What is your: Account value, amount required for margin, cash balance. What must you do?