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 percentage profit or loss is

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Quizplus · Accepted Answer

Eric's profit from the contract is calculated by taking the difference in the price per gallon at the time of contract expiration ($2.15) and the purchase price ($2.05), then multiplying by the contract size (21,000 gallons). This gives a profit of ($2.15 - $2.05) * 21,000 = $2,100. To find the percentage profit, divide the profit by the initial margin ($6,075) and multiply by 100. Thus, the percentage profit is ($2,100 / $6,075) * 100 = 34.57%.

Eric Has Just Purchased a Heating Oil Contract at $2