derivative trades report

When you look at your trading activities from Stocktrak.com, you won't see margin requirements charged, instead you only see $10 commission fee. In practice, you need to put up margin requirements when purchasing or selling futures. You may use this link to find margin requirement for each futures position: https://www.tradestation.com/pricing/futures-margin-requirements/. Use the initial margin only. However, you still need to know your futures contract's specification. Then, you use this website: http://www.usafutures.com/commodityprices.htm.

For example, if you bought 1 contract of gold futures at $1200/oz. From contract specification, you find out that each contract calls for 100 oz. So the face value of this trade is = 1*1200*100 = $120,000. The margin requirement from NY Merchantile Exchange is $6,075 per contract. So, you pay 1*6,075=$6,075 when establishing the trade. Assume that you sold gold futures at $1300/oz. The profit =1*100*(1300-1200)=$10,000 before commission. The return without leverage is =(1300-1200)/1200=8.33%. The return with leverage using margins = 10,000/6,075=164.61%. Because initial margin $6075 is only 5% of each contract's face value (6,075/120,000), your levered return is also 20 times (1/5%) as large.

Hope the above explanation helps your final report.

Positions:

1. Long one futures contract

2. Short one futures contract

3. Long mutual fund and hedge with one mini S&P index futures contract

4. Long one call option

5. Long one put option

6. Long one stock 100shares and write a call option on this stock with K higher than stock price

* Attach transaction history in your report. You will lose 20% for not attaching a copy of your transaction history.
* Set page margins as follows: Top 1”, Bottom 1”, Right 1”, Left 1”, line spacing 1.5 lines.
* Use “Times New Roman” with font size 12 for contents.
* Due day is May 8 (Tuesday), 2018.
*You can place tables and figures at places when they appear or place them in the section of Appendices.