I'm trying to wrap my head around how the $10 chunks work and how the futures execute... Probably a noob question but I'm lost and can't seem to figure it out no matter how much reading I do.

So say I'm selling a contract for 1BTC for $700, instrument 6.14. So if I'm correct, on June 14, 2014, the buyer of my contract will not pay me USD (since everything is in BTC), but in BTC. Correct?

Now, here is where I am lost. On the settlement date, with a normal future, I would turn over 1BTC in exchange for $700USD, even if the value of 1BTC is now only $600. In this scenario, the buyer has lost $100, in the form of overpaying for 1BTC. But since all contracts are settled in BTC on ICBIT, would the buyer pay me in $700 worth of BTC, at current market value? In my proposed scenario, ~1.166BTC?

On the flipside, if the market value of 1BTC goes up to $800, what happens? Do I still deliver 1BTC in exchange for only $700 worth of BTC, in this case ~0.875BTC?

How do the chunks play a role? The whole setup is confusing me and I really would like to understand so I can trade BTC futures.