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 Help 1 - Derivatives
 
keeskkool
1 posts
Joined
1/26/2009
Help 1 - Derivatives
Posted: 26 Jan 09 12:19 PM (N/A)

Hi everyone. Can you please help me to understand these points:

 

  1. In a futures contract, both the buyer and the seller have to deposit a margin.
    1. Is this true ?
    2. In this particular context (see question), does the "seller" refer to the "the short seller" ?

 

  1. Regarding the deposit margin, professional traders are able to deposit interest-earning assets
    1. Does the cash held in the margin deposit account earn interest ?
    2. What assets, other than cash, can be deposited in a margin account? Treasuries, Bonds? Investments –grade bonds, liquid, illiquid assets, is there any haircut applicable?
iceberg9
1 posts
Joined
9/24/2010
Re: Help 1 - Derivatives
Posted: 27 Sep 10 10:16 PM (Singapore)
1a. Yes both buyer and seller have to deposit a margin in a futures contract.
1b. Yes, seller= short, buyer = long.

2.a In the securities market, the margin is a collateralised loan from the broker. Eventually, the investor must repay the borrowed margin loan with interest.

2b. Not too sure about other assets.. I think only cash is used as a deposit in a margin account...
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