Peter is a wheat farmer who is concerned with the future decrease in wheat prices. He plans to sell 250,000 bushels of wheat. Additionally, he takes a short position (sells) fifteen wheat contracts to take advantages of future increase in prices. Details of the wheat contract include:

• Contract size: 5,000 bushels
• Current (spot) price: $0.80 per bushel
• Futures price: $0.83 per bushel

Calculate his net profit/loss if the price of wheat is $0.78 per bushel at expiration.

1. 198,750

2. 201,750

3. 189,750

4. 195,000