Futures (commodities) Trading and Margin
Is it true that the LOWER the maintenance margin requirement on certain
commodities (Mini Futures, Corn, Oats) the riskier that commodity is? As
opposed to the Higher (priced) maintenance margin futures. True? Not
true?
It is not that straightforward.
It is the margin as a percentage of the overall contract value. Lower
maintenance margin doesn't tell you anything - it depends on the price &
number of bushels/oz or whatever you're buying. The margin on a platinum
contract could be $5000, but if platinum is trading at $3000/oz, that
could well be a lower margin % than $2500 on a soybean contract, etc. But generally speaking, the lower the margin, the lower the perceived daily risk, so the opposite of ur statement.
No, and you can reduce your risk dramatically when you use
options along with your futures contracts. Thats what I used to do.
No. It is the opposite. The higher the margin requirement.the
riskier the underlying investment.
Hope this helped.
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