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A trader has a long position in a wheat contract.
What is the price at which the trader will receive a maintenance margin call?
Suggested Answer: D
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17 comments · newest first
FL
Fletcher
20 days ago
True, but it also depends on market volatility.
AV
Avery
25 days ago
C) $2.25 gives more security for the trader.
AR
Art
1 month ago
Exactly, that's why B) makes sense to me.
EL
Elfriede
1 month ago
Maintenance margin usually needs a bit of a buffer.
FL
Fletcher
1 month ago
D) $1.75 sounds risky. Not enough cushion.
AV
Avery
2 months ago
A) $1.90 is too low for maintenance margin.
AR
Art
2 months ago
I feel like it could be C) $2.25. Higher threshold.
EL
Elfriede
2 months ago
I think it's B) $2.05. Seems reasonable.
NY
Nydia
2 months ago
Wait, are we really expecting a call at $1.75? That seems off!
JA
Janey
2 months ago
Definitely $2.25, that's the standard threshold.
GL
Glenna
2 months ago
I'm not sure, but $1.90 seems too low for a call.
DE
Desmond
3 months ago
I think it's around $2.05, sounds right to me.
BR
Brett
3 months ago
Maintenance margin calls usually happen when prices drop significantly.
LE
Leonardo
3 months ago
I remember something about maintenance margins being a percentage of the contract value. Could it be $2.05? That sounds familiar.
SH
Shantell
3 months ago
I’m not entirely sure, but I think the maintenance margin call is often around $1.75 for commodities. That seems low enough.
NI
Nikita
3 months ago
I feel like we practiced a similar question where the maintenance margin was around $2.00. Maybe it's close to that?
AI
Aide
3 months ago
I think the maintenance margin call price is usually set below the initial margin, but I can't remember the exact calculation for wheat contracts.