Yesterday you sold six-month futures on the S&P index at a price of 2,100.Today the index closed at 2,050 and the future at 2,140.You get a call from your broker.Is he:
A) asking you to pay $40 times the contract size into your margin account?
B) asking you to pay $50 times the contract size into your margin account?
C) telling you that you can withdraw $40 times the contract size from your margin account?
D) telling you that you can withdraw $50 times the contract size from your margin account?

Question

Quizplus · Accepted Answer

The price of the future contract increased by 40 points (from 2,100 to 2,140), and since you sold the contract, you are now at a loss. The amount you have to pay your broker is the difference between the price you sold the contract (2,100) and the price at which the contract is currently trading (2,140), which is 40 points. Therefore, you need to pay $40 times the contract size (the number of contracts you sold) into your margin account. Option A is the only choice that states you need to pay $40.

Yesterday You Sold Six-Month Futures on the S&P Index at a Price