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Example: Commodities Margin Example

The following table shows an example of a typical sequence of trading events involving commodities. Although our Universal Account automatically transfers funds between the securities and commodities segments of the account, to simplify the following example, we will assume that the cash in the account remains in the Commodities segment of the account.

Action	Cash	Margin Requirement	Net Liquidation Value
1. Deposit $5,000.00	+ $5,000.00	$5,000.00
2 Buy 1 ES Futures Contract	$5,000.00	$2,813.00	$5,000.00
$850.00 * 50 (multiplier) ES Initial Margin Requirement = $2,813.00
3. End of Day: ESprice goes to $860.00	$5,500.00	$2813.00	$5,500.00
Gained $10.00 * 50 = $500.00
Net Liquidation Value > $2,813.00	No Liquidation.
4. Next Day: ES price drops to $810.00	$3,000.00	$4,500.00	$3,000.00
Lost $50.00 * 50 = $2,500.00
Net Liquidation Value < $4,500.00 Overnight Maintenance Margin	Liquidation occurs.