Has anyone read this article: FUTURES & OPTIONS TRADING STRATEGIES Trading the basis: How stock index arbitrage impacts the market Find out how program trading and index arbitrage can affect your trading. By David Lerman http://www.activetradermag.com/tocs/toc0303.htm
I see Prem as both an indicator and a definition. By definition ... Prem = futures - cash. As an indicator we can read Prem as a timing tool to enter/exit a position in the market. It is an indication of the relationship between cash and futures.