An investor purchases 10 futures contracts priced at $100 each. The initial margin is $20 per contract and the maintenance margin requirement is $10 per contract. The investor will most likely be required to post variation margin if the end-of-day prices over the next three days are:
| Day 1 | Day 2 | Day 3 | |
| A. | $103 | $105 | $104 |
| B. | $106 | $98 | $89 |
| C. | $95 | $91 | $103 |
B is correct. $110 of variation margin is required since the $90 margin balance after Day 3 is below the $100 maintenance margin. The $110 variation margin will re-establish the $200 initial margin.
The calculation is below:
Day 1 activity: $260 closing margin balance results from $200 initial margin plus $60 gain ($6 increase × 10 contracts)
Day 2 activity: $180 closing margin balance results from $260 opening margin balance minus $80 loss ($8 decline × 10 contracts)
Day 3 activity: $90 closing margin balance results from $180 opening margin balance minus $90 loss ($9 decline × 10 contracts)