Maintenace Margin question into, question, contract, account

justin88

Guy has $5 initial margin/contract. $3 maintenance/contract, 10 contracts.
Price at t=0 is $100/contract. Day 2, guy needs to deposit $30 into margin account. What was the closing price on Day 1?
Any help is greatly appreciated. Thanks in advance!

comp_sci_kid

I assume you buy 10 contracts at $100, put $50 in initial margin
price goes to $97 (you have $20 which is below maintenance margin amount of $30 you need to fill it up to initial margin) add $30 (you have $50 on the account which is equal to the initial margin). If you sell short 10 contract at $100, price goes to $103, then you get a margin call of $30.

jim8z3

Wouldn’t it be $95?
If contract drops to $97 you would only get a margin call for $10 to get you back up to the $30 maintenance margin.
Contract drops to $95, you need to the full $30 deposit to get back to maintenance margin.

chandsingh

remember this is a future contract. so you have to fill up to the initial margin every time.