After completing BFC$2751$ with a high distinction, you decided to become a trader. You have shown quite a knack for successfully predicting price movements in a variety of markets and are making a very handsome living.

You have just been reading about a severe drought in Brazil, which is the world$$s largest orange juice producer. You are also aware of a deadly citrus virus that is decimating orange crops in the US$.$ Putting two and two together, you realise that, if the supply of oranges is adversely affected by these factors, this is likely to squeeze orange juice prices higher. Another profit opportunity for you!

In your home office, you have a wall of LED monitors in front of you, with one dedicated to commodity futures. It is showing that frozen concentrated orange juice $($FCOJ$)$ futures trade on the Intercontinental Exchange $($ICE$).$ One FCOJ contract covers $15,000$ pounds of orange juice solids. Standard delivery months are Jan, Mar, May, July, Sep and Nov.

You think the impact of the drought and virus on orange price is likely to happen over the next few months, so select the near$-$dated Sep$-2022$ expiry FCOJ contract which has a quoted future price $($F$)$ of $200$ cents per pound. You hit on your keyboard and get an instant confirmation that you have successfully traded $10$ long Sep$-22$ FCOJ futures contracts.

a$)$ Having entered $10$ long FCOJ contracts, what are your obligations? What is the risk you face that might keep you awake at night?

b$)$ As a star trader, you have an enormous following on twitter. You send out a few tweets noting how terrible the Brazilian drought is$.$ And another tweet expressing your sympathy for the American farmers whose orange crops are being destroyed by the citrus virus. Your prayers are with them. Within a couple of days, the futures price for Sep$-22$ FCOJ has risen sharply to $230$ cents per pound. Although there is still time remaining before the September $2022$ expiry, you jump on the computer and close out by shorting $10$ Sep$-22$ FCOJ futures. Calculate your profit from trading these orange juice futures.