8. A portfolio manager (PM) at a financial institution is managing a $500,000 portfolio of stocks. The PM expects that the market will decline and its existing stock portfolio will decrease in value. The S&P 500 index shares the same risk profile as the portfolio of stocks. The PM writes S&P 500 futures contracts. The futures contract settles next month for 2000 (x250).

Which is true?

Group of answer choices

If the index price declines to 1700, then the pay off is +75,000

If the index price increases, then the pay off is +50,000

If the index price increases, then the pay off is -50,000

If the index price declines to 1800, then the pay off is $200,000