A speculator is convinced that the stock market will fall significantly in the forthcoming months. The current market index (14 November) level is 7350 (FTSE 100). He is investigating a strategy to exploit this market fall by selling ten FTSE 100 Index futures on ICE with a March 2022 expiry, current price 7400. Contract Unit for this futures is 10 per one FTSE 100 Index point.

Assume: no transaction costs. Required: For the derivative (a) What would the profit (loss) be if the index rose to 7500 in March under the strategy?

(b) What would the profit (loss) be if the index fell to 7150 in March under the strategy?