How to Read a Futures Statement

In my career as a futures broker I've had many clients, sophisticated and otherwise, ask how to read their statements. This post will go over the standardized daily futures statement.

Since you don't actually buy the underlying, the statement is different than your stock and bond confirmation. A futures contract is an obligation to buy or sell the commodity or other instrument at a specific time in the future. 

The following is the actual redacted "daily statement" for my new small account at T. D. Ameritrade. 

Note, this statement is commonly called a daily equity run and typically is either emailed or available for download from your futures broker. 

Lets review what's on here. Of course, your brokerage firm (technically a "futures commission merchant") name and address and phone number are on the top. This is followed by the customer name, date and account number. The next section shows the "CONFIRMATION" of all my trades for that day. 

Line 1 says on 1/7/21 I bought 1 March 2021 Micro Nasdaq Index contract (symbol MNQH21, not shown) at the price of 12880. 

Line 2 says the LTD, or last trade date for this March contract, is 3/19/2021 and the commission I paid was $2.25.  

Line 3 shows my average price for all my positions in this contract is 12880 and the exchange fee for this trade is $0.20.

Line 4 is the NFA (National Futures Association) fee, $0.02

Line 5 is the total commissions and fees of $2.47.

The next section shows my "OPEN POSITIONS", or everything I own in my futures account. 

Line 1 says I am "LONG" (I bought) the contract at 12880. The DEBIT/CREDIT shows my profit at the end of the day for this position was $96.

Line 2 repeats the LTD and shows the closing price for the statement date was 12,928 and my profit for all my positions was $96.

Line 3 just shows the average cost for all my positions (the one) was the same 12880.

Note that for this specific contract, MNQH21, 1 point = $2. Each separate commodity/futures contract has its own dollar multiple defined by the contract specifications. Thus, since the purchase was at 12880 and the closing price was 12928, the index rose 48 points which equaled 48 x $2 = a $96 gain.  

Of course, if the index FELL the account would LOSE $2 per point. 

The next section "MARGIN CALLS AND AGING" shows new and existing margin calls, if any. 

This day's margin call equals: 

starting cash = $0 

+ initial margin requirement $1,760 

+ commissions and fees $2.47 

- today's profit $96 

= $1,666.47

The broker then calls the customer and asks for a deposit of $1,666.47? 

No. 

In practice your broker would not execute your trade if you didn't have enough money in a cash account to cover the initial margin requirement. In fact, most brokers, like mine, will automatically withdraw from your cash account (or add any excess) to meet your futures margin requirements. 

Futures exchanges set margin requirements based on the risk they measure (an art if there ever was one) for holding the position. Today's margin for MNQH21 is $1,760. The "notional" value of the MNQ contract is 12928 x $2 = $25,856. So the margin, today, equals $1760/25836 = 6.8% of the contract value. In essence the exchange is betting the index will not fall more than 880 points in one day. In other words, less than $1800 controls $26,000 of the index. 

The press made a big ado when equity margin requirements ballooned for accounts wildly trading Gamestop. 

The last section is your daily cash statement. This is mostly self-explanatory.

Line 7 "OPEN TRADE EQUITY" (OTE) is the total profit or loss in the account, 

Line 8 "TOTAL EQUITY" (TE) = the sum of the ending balance + OTE

Line 9 "ACCOUNT VALUE AT MARKET" is the same as TE for simple accounts. 

Line 11 "MAINTENANCE MARGIN REQUIREMENT"  is the value, set by the exchange, your account can fall to without having a margin call. In most cases investors should just forget this. Just keep your account above initial margin or stop playing the game. 

Line 12 "MARGIN DEFICIT" shows the amount of my unmet call for that day. Most brokers will automatically transfer this amount from your cash account or give you 1 or 2 days to make a transfer. If you don't meet your margin call, your broker will liquidate your account and put you on the bad girl or bad boy list. 

My next post, Part 2, will show how to read the slightly different "month-end" futures statement. 

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors. Please follow this blog by email.