# futures contract margin call

1. A silver futures contract requires the seller to deliver 5,000 Troy ounces of silver. An investor sells one July silver futures contract at a price of \$8 per ounce, posting a \$2,025 initial margin. If the required maintenance margin is \$1,500, the price per ounce at which the investor would first receive a maintenance margin call is closest to: A. \$5.92. B. \$7.89. C. \$8.11. D. \$10.80. please provide answer with explanation

Maintenance margin = 1500/(5000*8)=3.75% 3.75%=(5000*8+2025-5000*X)/(5000*X)=>X=8.1012~8.11

thanks!

yep

oh, but the way I did it was a bit simpler, I think \$2025 - \$1500 = \$525 \$525/5000 ounces = \$0.105 Price is \$8+\$0.105 = \$8.11

Yes, you can use that one too. Calculate the difference between the initial margin and the maintenance margin and allocate the difference on each ounce, you’ll get the price at which the maintenance margin is just enough, a call is going to be made for any subsequent increase in ounce price.

there we go…thats much better. man map1, you know how to do it all the hard way! very impressive and scary