Futures contract could be used by both hedger any speculator

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Reference no: EM131932724

1) The futures contracts on the SPX (S&P 500 Index) has a value of $250X the current index value. Today, the index is at 2630 so the futures contracts has a value of $657,500. Explain, with a numerical example, how does futures contract could be used by both a hedger any speculator. Make whatever assumptions you need to you about your portfolio size for the example to work. It does not have to match up perfectly to the side of your portfolio. See my current margin requirement for $30,000.

2) Margin requirements for hedgers are lower than they are for speculators. Why?

Reference no: EM131932724

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