After an extensive analysis of political currents in Central and South America, you conclude that coffee prices will be lower in the future. The current futures price for coffee is $2.10 and each contract is for 37,500 pounds of coffee.
a) Would you enter a long or short futures position?
b) Suppose that you decide to enter into a 10-contract position. What would be your profit if your analysis is correct and the futures price falls to $1.90?