Silver Futures Margin Call: Price Trigger Explained

Chapter 17, Problem 3

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QUESTION:

A silver futures contract requires the seller to deliver 5,000 Troy ounces of silver. Jerry Harris sells one July silver futures contract at a price of $28 per ounce, posting a $6,000 initial margin. If the required maintenance margin is $2,500, what is the first price per ounce at which Harris would receive a maintenance margin call?

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Silver Futures Margin Call: Price Trigger Explained
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Explore a real-world investor scenario in this video, where Jerry Harris engages in silver futures trading. Learn how initial and maintenance margins work, and discover the price threshold that could trigger a margin call. Gain insights into risk management in futures trading and the implications for investors.

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Questions & Answers

QUESTION:

A silver futures contract requires the seller to deliver 5,000 Troy ounces of silver. Jerry Harris sells one July silver futures contract at a price of $28 per ounce, posting a $6,000 initial margin. If the required maintenance margin is $2,500, what is the first price per ounce at which Harris would receive a maintenance margin call?

ANSWER:

Step 1 of 2

Given data:

A silver futures contract requires the seller to deliver 5,000 Troy ounces of silver.

Jerry Harris sells one July silver futures contract for $28 per ounce, posting a $6,000 initial margin.

The required maintenance margin is $2,500.

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