Eric has just purchased a heating oil contract at $2.05 per gallon. The contract size is 21,000 gallons. Initial margin is $6,075; maintenance margin is $4,500. If the price of heating oil is $2.15 when the contract expires, Eric's profit or loss is

Question

Quizplus · Accepted Answer

Eric's profit is calculated by taking the difference between the selling price and the buying price, then multiplying by the contract size. The selling price is $2.15, and the buying price is $2.05, so the difference is $0.10 per gallon. Multiplying this by the contract size of 21,000 gallons gives a profit of $2,100.

Eric Has Just Purchased a Heating Oil Contract at $2