Review
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.

Quiz

  1. Which is a factor of margin requirement?
    1. Whether the position is speculative or a hedge
    2. Whether a hedger is initiating a position or maintaining one
    3. European- or American-style terms
    4. Time to expiration


  1. 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?
    1. The bill's intrinsic value is $984,800.
    2. Its IMM index is 93.82.
    3. The time value on its futures contract is $300.
    4. It trades in points and 32nds.


  1. Once a futures contract has risen to its price limit, it may not rise any higher through the expiration date.

True

False

  1. Which is not a way to close a futures position?
    1. Offset
    2. Retender
    3. Cash settlement
    4. Physical delivery


  1. Matching investors in long positions with investors in short positions in advance of physical delivery is called:
    1. pooling
    2. spreading
    3. assignment
    4. expiration


Answers

Related Articles
  1. Investing

    Investing in Crude Oil Futures: The Risks and Rewards

    Learn about the risks and rewards of trading oil futures contracts. Read about a few strategies to limit the risk in trading oil futures contracts.
  2. Investing

    Leveraged Investment Showdown

    Margin loans, futures and ETF options can all mean better returns, but which one should you pick?
  3. Investing

    3 Reasons to Use ETF Options Over Futures (SPY, QQQ)

    Learn about exchange-traded fund (ETF) options and index futures, and why it might be a better decision to use ETF options instead of futures.
  4. Trading

    The Difference Between Forwards and Futures

    Both forward and futures contracts allow investors to buy or sell an asset at a specific time and price.
  5. Trading

    American Vs. European Options

    These two options have many similar characteristics, but it's the differences that are important.
  6. Investing

    Investing Basics Quiz 1

    Test your knowledge with our short investing quiz.
  7. Investing

    Introduction To Currency Futures

    The forex market is not the only way for investors and traders to participate in foreign exchange.
Frequently Asked Questions
  1. What are the Differences Between Ex Works (EXW) and Free On Board (FOB)?

    Learn about Ex Works and Free on Board, the main difference between these Incoterms, and the responsibilities of buyers and ...
  2. What are Common Examples of Monopolistic Markets?

    Discover what causes real instances of market monopoly, how it persists and where monopoly privilege is most common in the ...
  3. What is the gold standard?

    The gold standard is a monetary system where a country's currency or paper money has a value directly linked to gold, but ...
  4. What's the most expensive stock of all time?

    The most expensive publicly traded stock of all time is Warren Buffett’s Berkshire Hathaway.
Trading Center