Futures contracts are written on crude oil. You enter ashortfutures position covering 20,000 barrels of oil, with a futures price (F) of $50per barrel. Several weeks later, when you close that futures position, the futures price on oil is $40 per barrel. What is the profit or loss on your futures trading?

Select one:

$800,000 profit

Impossible to determine without knowing what the underlying position in oil was.

$1,000,000 profit

$200,000 profit

$200,000 loss