Margin Calls

Discussion in 'Energy Futures' started by Engy, Aug 9, 2009.

  1. Engy

    Engy

    Since energy ftrs contracts are daily settled, what happens when the price of the contract has a ridiculously large move either in the positive or negative direction? Does Exchange enforce margin call that same day? How long do you have to post margin before the trader's position is liquidated? Are there any exceptions to that rule?
     
  2. Fund or liquidate in 1 day.
     
  3. Engy

    Engy

  4. heech

    heech

  5. Engy

    Engy

    Sorry, for clarification: pg 5 of those slides

    "All portfolio margin calls are due in
    three business days, but brokers may restrict activity or require liquidation
    sooner if uncovered margin calls result from risky positions"

    That was the subtle point that I should have pointed out for question in my earlier post... If this 3 biz day rule was ever piloted for commodities?
     
  6. Every broker is different, I was on call once in 07 in a wheat corn spread debacle for over a week.
     
  7. usman88

    usman88

    agreed....depends upon relationship with your broker
    if its a good one they allow your account to drop till $1000-$1500 NLV (Net Liquidation value)
     
  8. Engy

    Engy

    To clarify, the brokers always meet margin calls from the Exchange on the day of, and sometimes allow that trader to post margin at a later time/date? So does that mean from the Exchange's perspective, whenever they call margin, it is always met that same day for that position, yes?
     
  9. Engy

    Engy

    To clarify, you bought into the front month futures contract at the time yes? Or were the margin calls, on your position on options for the futures contract?

    So when margin is not met and 'position is liquidated,' is the position on the options on the futures contract or the futures holdings sold?

    Thank you. Newbe to the trading aspects.
     
  10. "A Clearing Member in default shall immediately make up any deficiencies in its security deposit resulting from such default prior to the close of business on the next banking day."

    http://www.cmegroup.com/rulebook/NYMEX/1/8.pdf

    However RTrader and usman88 are right also, but from the trader's perspective; as long as the broker has money to cover your margin call, well, extending you credit or not becomes a business decision.
     
    #10     Nov 20, 2009