It is April 15, and a trader is entered into a short position in two soybean meal futures contracts. The contracts expire on August 15, and call for the delivery of 100 tons of soybean meal each. Further, because this is a futures position, it requires the posting of a $3000 initial margin and a $1500 maintenance margin per contract. For simplicity, however, assume that the account is marked to market on a monthly basis. Assume the following represent the contract delivery prices (in dollars per ton) that prevail on each settlement date:

April 15 (initiation) May 15 June 15 July 15 August 15 (delivery)

173.00 179.75 189.00 182.50 174.25

Based on the May 15 settlement date, which of the following is TRUE

A. Since the equity value fell below the maintenance level, a variation margin is called.
B. Due to the fact that the equity value falls below the initial margin, a variation margin is called to restore the equity value of the account to it’s initial level.
C. The equity value falls below the initial margin.