Company: DEFI
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001999371-25-011381
Chunk: 10

Company: Tidal Commodities Trust I
Filing Date: 2025-08-14
Form: 10-Q
Item: Item 8
Chunk 10
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 trader’s broker to initiate
and maintain an open position in futures contracts. A margin deposit acts to assure the trader’s performance of the futures
contracts purchased or sold. Futures contracts are customarily bought and sold on initial margin that represents a very small
percentage of the aggregate purchase or sales price of the contract. Because of such low margin requirements, price fluctuations
occurring in the futures markets may create profits and losses that, in relation to the amount invested, are greater than customary
in other forms of investment or speculation. As discussed below, adverse price changes in the futures contract may result in margin
requirements that greatly exceed the initial margin. In addition, the amount of margin required in connection with a particular
futures contract is set from time to time by the exchange on which the contract is traded and may be modified from time to time
by the exchange during the term of the contract. Brokerage firms, such as the Fund’s clearing brokers, carrying accounts
for traders in commodity interest contracts generally require higher amounts of margin as a matter of policy to further protect
themselves. Over the counter trading generally involves the extension of credit between counterparties, so the counterparties
may agree to require the posting of collateral by one or both parties to address credit exposure.

When
a trader purchases an option, there is no margin requirement; however, the option premium must be paid in full. When a trader
sells an option, on the other hand, he or she is required to deposit margin in an amount determined by the margin requirements
established for the underlying interest and, in addition, an amount substantially equal to the current premium for the option.
The margin requirements imposed on the selling of options, although adjusted to reflect the probability that out-of-the-money
options will not be exercised, can in fact be higher than those imposed in dealing in the futures markets directly. Complicated
margin requirements apply to spreads and conversions, which are complex trading strategies in which a trader acquires a mixture
of options positions and positions in the underlying interest.

Ongoing
or “maintenance” margin requirements are computed each day by a trader’s clearing broker. When the market value
of a particular open futures contract changes to a point where the margin on deposit does not satisfy maintenance margin requirements,
a margin call is made by the broker. If the margin call is not met within a reasonable time, the broker may close out the trader’s
position. With respect to the Fund’s trading, the Fund (and not its shareholders personally)