1. Your Questions About Nasdaq Futures
Susan asks…
What are the DOW, NASDAQ, S&P FUTURES and how are they
measured?
If the markets are closed, how can you value the future of these stocks (DOW FUT, NASDAQ
FUT...) and how do they affect stocks when the markets open?
Steve Winston answers:
The market closes, buys and sells are halted...BUT...people put orders in to buy or sell stocks.
These orders are sitting till the open at the next day. If there are more orders to sell, the futures
will be down. If there are more orders to buy than to sell, the futures will be up. It is only an
indicator as to the market opening up or down. Remember, most of these orders are placed on
emotion, you have to look at the atmosphere for the next selling day and figure out if there is
any real reason for the futures to be up or down. Good luck.
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2. Carol asks…
what effect does the "08:35 am : S&P futures vs fair value: -4.40.
Nasdaq futures vs fair value: -7.00."?
what effect in the stock market does the "08:35 am : S&P futures vs fair value: -4.40. Nasdaq
futures vs fair value: -7.00." that is reported in the Yahoo financial page every morning? Also
are these futures reported some where else?
Steve Winston answers:
It gives an indication of where the markets are going to open. It's saying the S&P 500 index is
going to open about 4.40 pts down, and the Nasdaq index will open about 7 pts down.
These number reflect trading since the previous close, during after-market hours. These
numbers indicate selling in after-hours trading and a down-open.
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3. Mary asks…
Before the market is open, what statistics do they use to figure out
Dow and Nasdaq and S&P futures?
My dad and I love the stock market, but I'm curious as to what statistics, they use to figure out
the futures. Is a big part looking at other countries markets that open before our's. Do they look
at the day before and analyze what the buyers and sellers are going to do?
Steve Winston answers:
The answer to that question, unfortunately, will depend on the analyst-researcher-investor.
For example, if she believes in technical analysis, she’ll probably study past patterns (see, for
example, http://stockcharts.com/school/doku.php?id=chart_school).
On the other hand, if she is a ‘fundamental’, she will probably try to find a link between past
and expected macroeconomic information to future prices. More probably, expected information,
because past information, some say, is already incorporated into current prices. (By the way,
years ago, I read some Peter Lynch’s books, they are simply exemplary).
Future prices, per se, contain some information regarding the ‘future’. Whether or not this
information is biased, it is, of course, out of the scope of this short, and humble, answer.
Research indicates that the US stock market is the leader. But the behavior of the rest of the
world is always important. Take for example two weeks ago. Even though Asia is not a leader,
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4. its behavior had profound consequences on the US stock market.
I hope this helps.
Best Wishes!
Laura asks…
What is the difference betwin Nasdaq level 2 window and Market
depth window in futures market?
why do they look so different. and how come forex market does not have that option.
Steve Winston answers:
This might help you --> http://en.wikipedia.org/wiki/NASDAQ_futures
http://www.independentinvestor.co.uk/
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5. William asks…
Where can I get the quotes of Dow Futures and Nasdaq futures for
free?
Steve Winston answers:
Http://money.cnn.com/
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6. Jenny asks…
How long does the US futures trade?
DJ, S&P, Nasdaq futures, how long does it trade after the mkt closes at 4pmEST?
Steve Winston answers:
Been trading poorly lately merci a the republicans in office.
Vote obama/biden for a better tomorrow!
Betty asks…
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7. why are the dow, nasdaq, and s&p futures on the extreme upside
right now?
dow fut is up almost 300 points, nasdaq fut is up like 50 and s&p fut is up like 35....
why are they up so high? i thought that with fannie mae and freddie mac being taken over by
the government, the market would get slammed monday?
how will oil and silver probably do tomorrow?
Steve Winston answers:
The bailout indicates the end may be near for the mortgage crises. Oil is trading up a few dollars
right now in Asia. Silver is up about 15 cents.
Robert asks…
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8. What are Futures and where can I find its Chart?
I would like to know the difference between regular stocks and futures?
I would also like to find a free up to the minute chart of the nasdaq 100 future for reference?
Who are futures for and what are some facts and or tips about them?
Thank you for the help!
Steve Winston answers:
You are obviously familiar with the Nasdaq Index, and the S&P 500 index and the DJIA index.
Here's a chart of the DJIA index
http://quotes.ino.com/chart/?s=INDEX_DJI
For a futures chart, you have to go where they quote commodities. Yahoo isn't big on futures,
so here is
the Dow mini futures chart
http://quotes.ino.com/chart/?s=CBOT_YM.M10.E
Some of the major indices and their charts are here, including gold and oil
http://quotes.ino.com/indexes.html
You can't trade an index. So the index futures contract was developed to facilitate trade of an
index. They trade exactly like any other commodity, and similar to a stock, except they expire
quarterly. You're just betting on the change in price. Not to worry. Most people don't hold them
for more than a few minutes anyway, because they are highly leveraged contracts, like any
futures contract.
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9. What Does Futures Mean?
A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset),
such as a physical commodity or a financial instrument, at a predetermined future date and
price. Futures contracts detail the quality and quantity of the underlying asset; they are
standardized to facilitate trading on a futures exchange. Some futures contracts may call for
physical delivery of the asset, while others are settled in cash. The futures markets are
characterized by the ability to use very high leverage relative to stock markets.
Futures can be used either to hedge or to speculate on the price movement of the underlying
asset. For example, a producer of corn could use futures to lock in a certain price and reduce
risk (hedge). On the other hand, anybody could speculate on the price movement of corn by
going long or short using futures.
Investopedia explains Futures
The primary difference between options and futures is that options give the holder the right to
buy or sell the underlying asset at expiration, while the holder of a futures contract is obligated
to fulfill the terms of his/her contract.
In real life, the actual delivery rate of the underlying goods specified in futures contracts is very
low. This is a result of the fact that the hedging or speculating benefits of the contracts can be
had largely without actually holding the contract until expiry and delivering the good(s). For
example, if you were long in a futures contract, you could go short in the same type of contract
to offset your position. This serves to exit your position, much like selling a stock in the equity
markets would close a trade.
Okay, we've defined a futures contract, now let's look at an Index Futures contract
What Does Index Futures Mean?
A futures contract on a stock or financial index. For each index there may be a different multiple
for determining the price of the futures contract.
Investopedia explains Index Futures
For example, the S&P 500 Index is one of the most widely traded index futures contracts in the
U.S. Stock portfolio managers who want to hedge risk over a certain period of time often use
S&P 500 futures to do so. By shorting these contracts, stock portfolio managers can protect
themselves from the downside price risk of the broader market. However, by using this hedging
strategy, if perfectly done, the manager's portfolio will not participate in any gains on the index;
instead, the portfolio will lock in gains equivalent to the risk-free rate of interest.
Alternatively, stock portfolio managers can use index futures to increase their exposure to
movements in a particular index, essentially leveraging their portfolios.
And the last part of your question.
What Does Stock Mean?
A type of security that signifies ownership in a corporation and represents a claim on part of the
corporation's assets and earnings.
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10. There are two main types of stock: common and preferred. Common stock usually entitles the
owner to vote at shareholders' meetings and to receive dividends. Preferred stock generally
does not have voting rights, but has a higher claim on assets and earnings than the common
shares. For example, owners of preferred stock receive dividends before common shareholders
and have priority in the event that a company goes bankrupt and is liquidated.
Also known as "shares" or "equity".
Investopedia explains Stock
A holder of stock (a shareholder) has a claim to a part of the corporation's assets and earnings.
In other words, a shareholder is an owner of a company. Ownership is determined by the
number of shares a person owns relative to the number of outstanding shares. For example, if a
company has 1,000 shares of stock outstanding and one person owns 100 shares, that person
would own and have claim to 10% of the company's assets.
Stocks are the foundation of nearly every portfolio. Historically, they have outperformed most
other investments over the long run.
A good reference for financial terms and definitions go here:
http://www.investopedia.com/terms/f/futures.asp
http://www.investopedia.com/terms/i/indexfutures.asp
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