Discussion in 'Index Futures' started by Arthur Deco, Jul 17, 2009.
Can anybody explain to a simple country boy why the premium is negative?
Curious myself, maybe it's interest rates being close to zero?
The logical but absurd explanation is that smart money (futures traders) think the dumb money is overpricing stocks. Been this way for three days.
That would be my guess, except for the part about futures traders necessarily being the smart money.
I am really showing my ignorance (or inattention) here, but I don't EVER recall a negative premium except momentarily intraday. Interest rates aren't negative and there ain't no negative dividends. Some genius will explain it to a feeble-minded old man and feel superior.
From the classic, "Why the hell futures are lower than cash?" thread:
crgarcia noticed backwardation in USA 30 year treasury bond futures prices:
I notice backwardation in the FTSE 100 series futures contracts also.
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2506263 \img>
Thanks, Peckerlow, I see from here:
that the premium for NQ wasn't excessively negative in the -2 range. I'm just not used to thinking of dividends on the NASDAQ 100 as having any consequence relative to short-term interest rates.
And for those of you who think I was pretending to be stupid so I could shill for that site, I am that stupid.
the index futures have traded discount since summer 2007
Hmm. Based on my first post in this thread, it would appear that I don't know what I'm talking about. And not for the first time.
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