How to Calculate a Gain in Wheat Futures Using Margin
The standard wheat futures contract is for 5,000 bushels of wheat or approximately 136 tons of the grain. At $7.00 per bushel, each futures contract would be worth $35,000. However, a futures contract can be traded with an initial margin deposit of 10 to 12 percent of the contract value. As of July 2011, the initial margin amount for the wheat futures contract was $4,050. A trader's gain or profit is calculated based on the contract value change in relation to the amount of the margin deposit.
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Instructions
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Write down the open price of your wheat futures trade and the current price per contract. Wheat futures are quoted in number of cents plus eighths of a cent. For example, a wheat quote of 699-2 is $6.99 and 2/8ths of a cent. The minimum price change or "tick" for wheat futures is 1/4 cent or 0.2 in decimal form.
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Subtract the trade open price from the current price. For example, a long wheat futures trade was opened at 699-2 and the contract is currently at 722-6. The difference is 23-4 or 23 1/2 cents. If the result is a negative number, the trade is currently in a losing position.
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Multiply the futures contract price change times $50 per cent. Each wheat futures tick or quarter-cent is worth $12.50 per contract. The example price gain of 23.5 cents is worth $1,175.
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Divide the per-contract value change by the initial margin deposit to calculate a trade's percentage gain. In the example, $1,175 divided by $4,050 gives a result of 0.290 or a 29.0 percent gain.
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Tips & Warnings
Wheat futures can be traded to profit from either rising or falling wheat prices. Opening the trade with a long position -- as in the example -- profits from rising prices. Opening with a short order -- selling a contract -- profits from falling wheat prices. The margin requirement is the same for long or short trades.
References
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