Opening Estimates and Future Value

D

DallasCowboysFan

When you watch CNBC in the morning, they have estimated opening values of the stock market. It says.... DJI........Future........Future Value, how is it determined?

Is the future (opening value) based on orders that have been placed at the market value but have not been filled?

How would it be determined if the market has not been opened? When you place an order and the market is closed.....does the request stay with the broker and get sent forward the second the market opens......(which is what I thought happened)?

Or does the request get sent from the broker to the NYSE (as soon as the request is made even if the market is closed) and sit in their computers while the stats and orders are compiled waiting for the open?

The future value is always a few points different from the figure given for the future.
Is that a deviation, based on the opening estimate?

Inquiring minds would like to know.

Many Thanks!
 
java said:
if you are talking about implied open it is based on how far overnight futures are trading off of fair value based on the previous close.
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Correct, but how is it determined?

Is the implied open determined by the orders waiting to be filled ? How is that number determined if the market is closed?

And the fair value is generally 7-8 percent of the implied change....if they predict that the market will open 66 points lower, then the fair value might be 6,7,8. At least from the casual observations being made by me in the mornings.

Is the fair value a deviation........if the implied open is 66 down and the fair value is 7...
is that a deviation........are they suggesting that it will open in a range from 59-73 points lower?

Does the FV even serve a purpose? It just looks like eyewash to me.

Thanks
 
DallasCowboysFan said:
Correct, but how is it determined?

Is the implied open determined by the orders waiting to be filled ? How is that number determined if the market is closed?

And the fair value is generally 7-8 percent of the implied change....if they predict that the market will open 66 points lower, then the fair value might be 6,7,8. At least from the casual observations being made by me in the mornings. The implied open is based then on the discount or premium the futures are trading to fair value.

Is the fair value a deviation........if the implied open is 66 down and the fair value is 7...
is that a deviation........are they suggesting that it will open in a range from 59-73 points lower?

Does the FV even serve a purpose? It just looks like eyewash to me.

Thanks
More...
it's all based on a fixed number which is the previous close. Fair value is a calculation of where the cash is now and how much it should be worth taking into account dividends until futures contract expiration.
 
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