A currency speculator wants to speculate on the future movements of the €. The speculator expects the € to appreciate in the near future and decides to concentrate on the nearby contract. The broker requires a 2% Initial Margin (IM) and the Maintenance Margin (MM) is 75% of IM. Following € Futures quotes are currently available from the Chicago Mercantile Exchange (CME). Euro (CME) - €125,000; $/€ Open High Low Settle Change Open Interest June 1.2216 1.2276 1.2175 1.2259 -0.0018 255,420 Sept 1.2229 1.2288 1.2189 1.2269 - 0.0018 19,335 In addition to the information provided above, consider the following CME quotes that are available at the end of day one’s trading: Euro (CME) - €125,000; $/€ Open High Low Settle Change Open Interest June 1.2216 1.2276 1.2175 1.2176 -0.0083 255,420 Sept 1.2229 1.2288 1.2189 1.2190 - 0.0079 19,335 Which of the following is TRUE?
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A currency speculator wants to speculate on the future movements of the €. The speculator expects the € to appreciate in the near future and decides to concentrate on the nearby contract. The broker requires a 2% Initial Margin (IM) and the Maintenance Margin (MM) is 75% of IM. Following € Futures quotes are currently available from the Chicago Mercantile Exchange (CME).
Euro (CME) - €125,000; $/€
Open High Low Settle Change Open Interest
June 1.2216 1.2276 1.2175 1.2259 -0.0018 255,420
Sept 1.2229 1.2288 1.2189 1.2269 - 0.0018 19,335
In addition to the information provided above, consider the following CME quotes that are available at the end of day one’s trading:
Euro (CME) - €125,000; $/€
Open High Low Settle Change Open Interest
June 1.2216 1.2276 1.2175 1.2176 -0.0083 255,420
Sept 1.2229 1.2288 1.2189 1.2190 - 0.0079 19,335
Which of the following is TRUE?
A. The Futures position will not be affected at the end of day one’s trading.
B. Cannot be determined, more information required.
C. The Futures position will result in a LOSS of $1,037.50 at the end of day one’s trading
D. The Futures position will result in a PROFIT of $1,037.50 at the end of day one’s trading
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