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

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