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Futures thread

CA Final 393 views 1 replies

Hi,

Help me build a thread if anyone has time by posting easy problems in futures. Double entries can also help. 

Ram bought oil futures anticipating a drop in price. 

3 months futures delivey = 10 per barrel

Contract size = 100 barrels

TICK size = 1 paise per barrel

Initial margin = 10% of contract.

Buying = 10 contracts

Initial margin = 10% into 10 contracts into 100 barels into 10 inr barrel price = 1000inr. 

Price increased by 1 rupee and the 

Loss= 10 contracts into 100 ticks into (contract size 100 into 1 paise) = 1000 inr margin maintenance.

If you come across any other futures, post iy here.

Txs

Replies (1)

Hey Yasaswi! That’s a solid start for a futures thread — easy problems with clear numbers really help people get the concept.

Here’s a cleaned-up version of your example, plus a few extra simple ones with double entries to keep it practical for learners:


🛢️ Example 1: Ram buys Oil Futures

  • Futures price: ₹10 per barrel

  • Contract size: 100 barrels

  • Tick size: 1 paise (₹0.01) per barrel

  • Initial margin: 10%

  • Contracts bought: 10

Calculate initial margin:

  • Price per contract = 100 barrels × ₹10 = ₹1,000

  • Total for 10 contracts = ₹1,000 × 10 = ₹10,000

  • Initial margin (10%) = ₹1,000


Price moves up by ₹1 (from ₹10 to ₹11):

  • Loss per barrel = ₹1

  • Loss per contract = 100 barrels × ₹1 = ₹100

  • Loss on 10 contracts = ₹100 × 10 = ₹1,000


Accounting entries:

Transaction Debit (₹) Credit (₹) Explanation
Initial margin paid Margin A/c Bank A/c Paid initial margin
Mark-to-market loss Loss A/c Margin A/c Loss due to price increase
(If margin maintenance called) Bank A/c Margin A/c Paid additional margin

🔄 Example 2: Priya sells Gold Futures

  • Futures price: ₹50,000 per 10 grams

  • Contract size: 100 grams (10 lots)

  • Tick size: ₹10 per 10 grams

  • Initial margin: 8%

  • Contracts sold: 5


Calculate initial margin:

  • Price per contract = ₹50,000 × 10 = ₹500,000

  • For 5 contracts = ₹500,000 × 5 = ₹2,500,000

  • Initial margin (8%) = ₹200,000


Price falls by ₹500 per 10 grams (₹5000 per 100 grams):

  • Gain per contract = 100 grams × ₹500 = ₹5,000

  • Gain on 5 contracts = ₹5,000 × 5 = ₹25,000


Accounting entries:

Transaction Debit (₹) Credit (₹) Explanation
Initial margin paid Margin A/c Bank A/c Paid initial margin
Mark-to-market gain Margin A/c Gain A/c Profit due to price drop
(Withdraw margin gain) Bank A/c Margin A/c Withdraw margin gain

📝 Tips for your thread:

  • Start each problem with given data and a simple question.

  • Show clear step-by-step margin and P&L calculations.

  • Include journal entries for each event (initial margin, daily MTM gain/loss, margin call).

  • Use real-life examples like commodities, indices, or currency futures.

  • Encourage people to post their problems or doubts to keep the thread interactive.


CCI Pro

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