Initial Margin & Notional Value

Discussion in 'Commodity Futures' started by kongkalikong, Jun 1, 2018.

  1. Hey everyone!

    Something tells me I'm wrong here, would appreciate clarity:

    Lean Hogs contract: 40,000 pounds per contract
    Price is dollars and cents per pound

    Current trading price is 76.7. So the notional value is approximately $3 Million.

    According to the CME, the initial margin is $1,300.

    $1,300 to control $3 Million in notional value? 2,360x leverage?

    Something isn't right (most likely I've misunderstood something here - can't see how you can make money at 2360x leverage; a .0433% move against you will wipe out your margin)
     
  2. believezz

    believezz

    its 40,000, cents per pound

    so notional is $30k not $3M
     
    Autospreader, Baron and Robert Morse like this.
  3. truetype

    truetype

    Those darned decimal points...
     
    Autospreader likes this.