Sino-Aus Ltd (SAL) wants to invest in a futures contract. However, they are not certain what position to take in the futures contract. Industry analysts advised them that the market is at a 'low point'.

Required

a. What position would you recommend SAL to take in the futures contract? Justify your answer (5 Marks)

b. Would your answer be different if the market is at a 'high point'? Explain (5 Marks)