You may receive a margin call if:
-
you have a long (buy) futures position and prices increase.
-
you have a long (buy) futures position and prices decrease.
-
you have a short (sell) futures position and prices increase.
-
you have a short (sell) futures position and prices decrease.
-
both (1) and (4).
-
both (2) and (3).
Reveal answer
Fill a bubble to check yourself
F
Correct answer
Explanation
A margin call occurs when your account balance falls below the maintenance margin requirement. For a long futures position, this happens when prices decrease because you're locked into buying at the higher contract price. For a short position, it happens when prices increase because you must buy back at higher prices to fulfill your obligation. Therefore, both scenarios (2) and (3) correctly describe margin call situations.