An equity index futures contract has a $5 multiplier, a tick size of 0.25, and a tick value of $1.25.

A trader speculates that the equity index will increase and enters into this contract when the index is at a level of 1,400.

Assuming that the futures contract increases by 400 ticks, which statement is correct?

Initial Contract Value = $7,000, Profit = $100

Initial Contract Value = $1,400, Profit = $500

Initial Contract Value = $7,000, Profit = $500

Initial Contract Value = $7,000, Profit = $350