newbie questions: since buyer and seller trade a future, how is the future ACTUALLY mapped to the respective index? I'm looking for inner workings, but not a referral to a book - I just want a basic explanation, or a confirmation if my understanding is correct. Thanks. ie: 1) ES futures must correspond to S&P price well enough, otherwise arb opportunity existed. Who,how,and what ACTUALLY does the process entail? I assume it is the exchange, ie CME that upon final delivery of the future buys or sells the underlying basket to come up with money for delivery to the future holder or seller. Correct? 2) how does this work with things that are set up to arbitrary indexes, ie housing futures? Lets say I sell a future for San diego 07. Then Schiller releases an index 10% down. Since the 'underlying' (the Schiller index) is not an actual asset, how does the actual bid/ask of the future stay correlated to the index? I assume CME can't just force this correlation. There doesn't appear to be any arb opportunity here to correct price differences between index and actual trading contract. Am I correct? What forces bid/ask to purely reflect the index price ? (again, I assume nothing if no arb is actually possible since the underlying index value is not a tradeable asset).