Before entering a futures or options transaction, the exchange requires a minimum amount of money to be deposited into your trading account. The money required to initiate a futures or options positions is referred to as the initial margin requirement.
While the initial margin is the minimum amount of money required to enter a trade, maintenance margin is the minimum amount of money that must be maintained in the account. If the money in your account drops below a certain level, your broker will make a margin call. A margin call is a request by the broker for the account holder to deposit additional money into the trading account. This usually happens when the futures/options position in the account loses money. The only position that will not require maintenance margin is a “long only” options position. Buyers of calls or puts can only lose the money that is spent on the premium.
Maximum Futures/Options loss:
A successful risk manager will learn to manage their farm’s profitability and also fit within their capital limitations. In the AgYield simulator, each game has a maximum amount of money that can be lost on futures/options positions. This includes all open and all closed positions. This is meant to simulate the real-world situation of capital restraints on Hedging lines of credit that many operations get through their lending institution(s). This limit is set by the game’s Administrator as a total $ amount. This amount can be seen under the game settings icon at the top of the Dashboard tab. You will be notified if your futures/options losses start to approach the game’s limit. If your futures/options losses exceed this limit AT ANY TIME your open positions will be automatically closed out at the current market price and you will no longer be allowed to enter futures/options contracts for the remainder of the game.