Margin

An investor sold ten March stock index futures contracts. The multiplier on the contract is 250. At yesterday’s settlement price of 998.40 the margin balance in the account was computed as $86,450. Today the index future had a settlement price of 1000.20. The new margin amount is: A) $90,950. B) $86,000. C) $86,900. D) $81,950.

D (1000.20-998.40)*250*10=4500 Since he’s in a short position, he’s loosing out and the margin falls to: 86450-4500 = 81950

i will go for a) 1000.2-998.4 = 1.8 1.8*10 = 18 18*250 = 4500 86450 + 4500 = 90950

kevin002 you’re right. i should read questions more carefully. since he is short it will be 86450 - 4500 = 81950, so correct answer is indeed d).

Only catch was to detect the futures contract position held by the investor. Answer is so D’ish. - Dinesh S

Just to be a d&^k - If maintenance margin was 85K, the new margin account balance would be the initial margin…