Registered User
Joined: 8/19/2006
Posts: 11
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On 11/18/2008 CNBC displayed on its website before the market opened this information. Can someone please explain the difference and importence of these two columns. Thank You
| FUTURES |
FUTURES FAIR VALUE (-90.75) |
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 |
 |
|
 |
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| 8691.25 |
8450.0 |
-324.00 |
|
8683.25 |
8450.0 |
-233.25 |
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Registered User
Joined: 11/18/2008
Posts: 37
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Well I am not sure why noone has responded to this yet. It has been about 4 days now.
Kirk you have 2 elements in here, well actually 3
The cash value of that Index
The future value for that index
The futures fair valure for that index.
We could get actually into what the fair value means and how to calculate all of that and such, but why bother since you are already given the numbers.
This is what you have to keep in mind. The differences between the futures value and the cash value on one side, and the differences between the fair futures value and the futures value themselves.
Those two calculation are already given to you above also. The resuts are -324 for the futures,
and -233.25 for their fair value.
This is what you need to know - at any time that the value of the futures is above their fair value - traders are betting that the market index will open higher and viceversa.
In this case, the value of the futures was 90.74 lower than the fair value of the future - therefore the traders were betting that the index would open lower.
Now that I have said all of that, I also have to tell you that this information can be misleading at times because of the fact that those values can be manipulated heavily by hedge funds and other intitutional players.
On the morning of the 18 this is what happen. The dow actually opened slightly higher. It went down for about a minute to be below the prior day closing, and within 5 minutes it took off going up like a bat out of hell.
Let me show you (the blue line is prior day's opening.
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