Practice question (futures contracts and margin account)

The following is a table representing transactions in a margin account for a possible sequence of copper
futures prices from July 1 to July 11. Here is some information related to the table: 3 contracts are held
by the investor and the size of one contract is 25 000 pounds of copper.

• The position was opened early July 1st at a price of $3.72 per pound.
• The position was closed on July 11 at the end of the day.
• The initial margin is $2 000 per contract.
• The maintenance margin is $1 500 per contract.
• The future prices shown in the table are closing prices in dollars per pound of copper.
• The numbers displayed in the other columns are calculations for all contracts.

Futures Gain Gain (loss) Margin Margin

Date price (loss) cumulative account calls
01-july ??? -750 ??? ??? ???
02-july 3.75 -1500 ??? ??? ???
03-july 3.77 -1500 -3750 ??? ???
⋮ ⋮ ⋮ ⋮ ⋮ ⋮
09-july 3.73 -3750 -750 ??? ???
10-july ??? ??? ??? ??? ???
11-july 3.78 -3000 ??? ??? ???

a) Does the investor have a long or short position? Justify your answer.
b) How much did the investor have to place in the margin account when entering the market?
c) What was the future closing price as of July 1st?
d) On what date was the first margin call made and how much did the investor have to place in the
account?
e) What number should be displayed in the "Cumulative gain (loss)" column. "column for July 11? Justify
your answer.