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by pyrrhotech 619 days ago
Good question - you won't be "called" or anything like that in this scenario as you are effectively market neutral. If VOO goes up, your ES/MES futures value will go down accordingly and your account's net liquidation value will remain unchanged and well above your maintenance margin figure.

The only way to really drop below your maintenance margin is if you are either leveraged long (i.e. more than 100% long) or short (i.e. less than 0% long), and the market moves significantly against you. In that scenario, your broker will automatically start liquidating some of your positions.
1 comments
angoragoats 619 days ago
That makes sense from the perspective of my brokerage/margin account, thanks! I guess I was also curious about the futures themselves; since they’re a contract to buy/sell just like options, would I ever be required to take an action, assuming I’m holding the futures contract at expiration?
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pyrrhotech 619 days ago
Oh no, you are never required to take an action with equity index futures as they are cash settled every quarter. So whether you have an open long or short position at expiration time, it will automatically disappear from your account with your balance left exactly as it should based on the settlement price.

However, this does mean that you'd need to open an equivalent position in the next quarter's contract to maintain your hedge, if one was open, at expiration time which is regular trading hours opening time on the third Friday of expiration month.

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angoragoats 619 days ago
Got it! Thank you so much for the info. Interesting stuff!
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