Series 3 case studies
Series 3 · Put your knowledge to work in context.
The Series 3 - formally the National Commodities Futures Examination - is the proficiency exam for individuals who intend to solicit or accept orders for commodity futures contracts and options on futures. It is a National Futures Association exam administered by FINRA, so the NFA owns the proficiency requirement while FINRA handles enrollment, scheduling and test delivery. The Series 3 case studies are 5 cases and about 4,231 words.
1Three Lots of Corn, Three Settlements, One Margin Call
A customer is long 3 March corn futures at 4.80 per bushel (5,000 bu per contract; the minimum tick is 0.0025, worth 12.50). The firm requires 1,500 initial and 1,100 maintenance margin per contract, and the account holds exactly 4,500 of margin equity after the purchase.
779 words, about 4 min2A 27-Cent Futures Gain That Only Delivered 27 Cents of Protection
You manage origination for a country elevator. On September 10 the elevator owns 60,000 bu of corn that will be sold in November.
762 words, about 4 min3A Put Floor, a Lender's Objections, and a Hailstorm
In August a producer expects to harvest and sell 25,000 bu of corn in late October. December futures are 4.40 and the expected harvest basis is 20 cents under.
819 words, about 4 min4Sizing a Crude Breakout Against a $30,000 Account
A customer with 30,000 of margin equity wants to buy 6 December crude oil futures at 60.00 (multiplier 1,000 barrels, so 1.00 = 1,000 per contract). Initial margin is 6,000 and maintenance is 4,400 per contract.
929 words, about 5 min5The Investment Club That Wants a Guarantee
Vance, an associated person at an FCM, is soliciting a four-member investment club that has pooled $120,000. The club's president asks Vance to (1) trade the account without calling each member first, (2) sign a side letter under which the firm reimburses the club for any loss beyond 10% of its deposit 'so nobody can get hurt,' and (3) approve the flyer Vance has already emailed, which shows a five-year 'hypothetical' track record of 34% annualized and states the results are 'typical and guaranteed by the record.' One member wants to be the only signer on the account.
942 words, about 5 min