How is YM calculated?

[cooter]

	Quote:	GCB
	The YM is a index future whose price is totally calculated by supply and demand, the buying and selling of futures.

Yes, and no.

Because the YM (and DJ and DD) futures are cash-settled at the contract expiration based on the value of the actual DJIA index, it manages to keep in lock step with the Dow.

More info here:

http://www.cbot.com/cbot/pub/cont_de...6+8709,00.html

There was a legal battle many years ago when the CBOT wanted to use the Dow index as a basis for a futures contract, but the Dow Jones Co. would not give its consent. So another index was developed that was said to mirror the movements of the Dow - since the CBOT could not use the actual Dow at that time as a benchmark. It was known as the MMI - Major Market Index, and based upon 20 of the 30 stocks in the Dow index.

In 1997, Dow Jones and CBOT agreed to issue a futures contract based upon the DJIA - this replaced the MMI futures contract.

[notouch]

I think it's a bit more complex than some people here are trying to present. There is a fair value for YM based on not only the DJIA but also dividends and interest. That's why the further from expiry, the bigger the gap between YM and DJIA. Once the future has expired it settles at the DJIA cash price. YM never diverges far from fair value because arbitrageurs step in and move it back to fair value.

[Nick1984]

This is off topic don't want to hijack the thread but: Cooter your avatar is starting to freak me out! lol That damn smiling penguin is stalking my IP!

[cooter]

We know where your stops are resting too, Nick!!!

:lol:

Actually I put it on there just to keep people HONEST and remind them that they are not as anonymous as they think they are, or as they would like to be, when on the Internet.

[Nick1984]

omg noooo my stops! lol

Thats it I'm using a phone broker now! hehe.

Thats very true Cooter. Despite all the most fancy firewalls we can still be tracked! I should go delete my history before my missus finds me! jk heheh