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Draw a fully labelled diagram of the future contract

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Question - On February 6, 2020, you buy an August, 2020, gold futures contract at $1700 per ounce. Each futures contract covers 10 ounces of gold. Assume that the daily price movements of the futures contract from February 7, 2020, to February 10, 2020, are as follows: $1719, $1693, $1698, $1708. The initial margin is $2000 and the maintenance margin is $1000.

(a) Draw a fully labelled diagram of the future contract, showing the profit and loss profile for the buyer of the future contract.

(b) Mark the futures to market for the above dates and calculate the balance of the margin account.

Reference no: EM132994213

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