E-Mini pricing

[rca420]

Hi all,

Trying to understand the e-mini and I have a question regarding the pricing of it. I understand that a Stock's price comes from how well the company is performing. The DOW, S&P500, Nasdaq's points comes from the list of companies "within" the specific index. Now what I am trying to grasp is where or what influences the E-Mini futures? The spot index? The stocks? I'm not sure if I'm wording my question correctly, but i hope you guys/gals understand what i'm trying to ask. Thanks in advance!

 

[scalperhill]

There are a lot of different things that would influence the price on a short term basis, but on a longer term view the effect would come from all of the stocks collectively. If the stocks in the index are considered expensive, then the price you're willing to pay for all 500 of them would come down. Giant computer programs run the arbitrage between the two and all the stocks in the index. That's why most stocks move up or down together. The less volatility the more the stocks can move independently of each other, the faster the market, the more everything will move in unison.

The futures in the pre market section offer the cheapest way to manipulate the entire market. If, for instance, the FED comes in and spends hundreds of millions buying up the futures contracts, then the stocks will be lagging, so computer programs will kick in to buy the stocks and sell the futures contracts. This is all done at the speed of light by very large firms.

Hope that answers part of your question. It's a hard one to answer.