mark to mark — OpenTuition Forums

Sshilpa8y ago

three month euro contracts 125000 contract size successive daily prices on future mrkt you have sold are selling price 0.6916 day 1 0.6930 initial margin are 1000 pound per contract .variation margin 100% of intial margin examiner has given 0.6930-0.6916 =14 tick loss,14 *12.5 pound?? 1)how did we get 12.5 pound?? 2)what does it mean by mark to mark daily basis? what are we doing here exactly ??

John MoffatTutor8y ago#1

It is mark to market (not mark to mark), and refers to the fact that the initial margin (deposit) is increased or decreased as the futures price goes up and down. I explain about the margin in the lectures, and also explain about how the tick size is calculated. As the futures price changes by 1 tick (0.0001) then the profit or loss on one contract changed by $12.50 and so the margin has to be increased or is decreased by $12.50 for each contract.

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