An investor enters into a short position in a gold futures c

An investor enters into a short position in a gold futures contract at USD 294.20. Each futures contract controls 100 troy ounces. The initial margin is USD 3,200, and the maintenance margin is USD 2,900. At the end of the first day, the futures price increases to USD 300. The investor\'s position marked to market at the end of the first day by? 1) o 2) -$580 3)+$580 )-$760

Solution

An investor enters into a short position in a gold futures contract at USD 294.20. Each futures contract controls 100 troy ounces. The initial margin is USD 3,200, and the maintenance margin is USD 2,900. At the end of the

first day, the futures price increases to USD 300. The investor\'s position marked to market at the end of the first day by?

ANSWER : 2) - $580

As investor has short the gold futures contract, he will benefit onlt if price falls.

but here price has increased, so he will have loss

Loss = (300 -294.2) x 100 = -580