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Scenario if Prices were to rise Details Futures Platform Physical market 1" January Buy Gold Futures Contract 15th March Sell Gold Futures Contract Buy the required quantity of gold in the physical market Spot Prices 10 gram) Futures Prices expiry 5th Apr. 10 gram) Date 19 January 51500 50260 15th March 53840 53360 Using the data given above, calculate the gain/loss assuming the jeweller needs 60 kg gold. Exercise on speculating in the commodity market Suppose a speculator expecting an increase in aluminum price takes a position in the market by buying 10 contracts for delivery in March 2022 at USD3170 per ton. As March approaches price may either move up to USD 3400 per ton or move southward to USD 3100 per ton. Margin 10% Activity: What will be the profit and loss potential in the scenario described above? Exercise on understanding the flow of margin Let's say two speculators-one bullish and one bearish-clect to take opposite positions in March crude oil at $93 per barrel. Both maintain accounts at brokerages that allow them to trade on exchange at minimum margins. Both would be required to put up the $4725 performance bond to open their positions. Traders are aware that the exchange also set S3500 as the maintenance requirement for their contracts. That means that up to 51225 (S4725-S3500) in losses could be sustained before a maintenance call is issued. This translates into a price change of $1.22 per barrel, as a minimum lot is 1000 barrels. Any adverse price movement in excess of $1.22 per barrel will put one into margin call territory Activity: Calculate what happens if March crude oil rises to $94.36

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