When to Hedge By knowing the enterprise cost of production, Joe can determine at what prices he might consider forward pricing portions of this crop. It is important that producers determine a target profit margin, because people have a tendency to always want to price at the market high. Commissions are paid to a broker for administrative costs, futures exchange operation, and futures exchange regulation. An order is either a buy or sell order. Margin money is only paid on futures positions and not options positions.
Margin money refers to earnest money placed in a brokerage account to cover potential losses.
The initial margin is needed to start trading. The exact percentage is determined by the commodity broker. The maintenance margin is used to step up the initial margin account. There is no maximum number of times a margin call can occur.