Futures margin requirements depend on the exchange, the underlying assets, whether the investor is initiating a new position or maintaining a current one, whether the investor is a hedger or a speculator, and whether the position is standalone or the leg or a spread.
It is important to understand how options are valued and quoted in order to effectively trade futures contracts, particularly those related to interest rates or indices.
Price limits and other so-called circuit-breakers have an impact on prices and margin requirements.
A position can be closed through liquidation, delivery or cash settlement.
There is a specified process for closing positions that involves assignment and exercise dates, concepts from the options world.
- Which is a factor of margin requirement?
- Whether the position is speculative or a hedge
- Whether a hedger is initiating a position or maintaining one
- European- or American-style terms
- Time to expiration
- A 9-month T-bill has a 6.08% yield with 90 days to maturity. A futures contract for it is trading at $985,100. Which is false?
- The bill's intrinsic value is $984,800.
- Its IMM index is 93.82.
- The time value on its futures contract is $300.
- It trades in points and 32nds.
- Once a futures contract has risen to its price limit, it may not rise any higher through the expiration date.
- Which is not a way to close a futures position?
- Cash settlement
- Physical delivery
- Matching investors in long positions with investors in short positions in advance of physical delivery is called:
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