Home Solutions Hedgers and speculators are two types of futures traders. For each type, explain what would motivate the trader to open a long futures position.
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Hedgers and speculators are two types of futures traders. For each type, explain what would motivate the trader to open a long futures position.
Marking to market
Paul buys one contract to purchase corn futures in 3 months’ time. One contract covers the purchase of 100 bushels. The current corn futures price on April 2 is $6,280 per bushel. The closing price for the corn futures over the subsequent days is provided in column 1 of the table below. The broker requires you to deposit an initial amount of $7,000 into a margin account. The maintenance margin is $6,500. Complete the table below to show how much is transferred to or from your margin account each day?
Remember if the margin balance falls to the maintenance margin, it must be restored to the initial margin level.
Beginning margin account balance
Closing margin account balance