The CME Group yesterday announced that it would be bumping the margin on the silver futures contract from $5000 to $6500 effective today. That’s a 30% bump, which no doubt has impacted some traders. In making this move, the exchange increased the margin from about 3.6% (at current prices as I write this) to about 4.7% (a silver contract being 5000 troy ounces). The chart below explains the move.
Silver prices have jumped about 50% since the end of August. Back then, the $5000 margin was about 5.4%. Volatility was also significantly lower. Now we’re looking at a much higher price and significantly higher volatility. The futures exchanges will make adjustments to margins based on both factors as they see fit. It’s interesting in this case, though, that they haven’t bumped it up to the approximate level it was before.
If you like this post or find it informative, I encourage you to sign-up for the newsletter.
Also subscribe to the blog feed and/or follow via Facebook or Twitter.
About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
** See John’s full bio.
Similar Posts:
- More New Margin Requirements
Predicting Fed Rate Policy with Fed Funds Futures
