22. Stock Index, Oil and Other Futures Markets

Financial Markets (ECON 252) Futures markets have expanded far beyond their initial application to farmer s planting and harvest cycles. These markets now allow investors and traders to set prices for a broad spectrum of assets and for a whole term structure stretching into the distant future. Some of these markets are often priced according to simple fairvalue formulae, others are not. Futures markets can be in backwardation, where the future price is lower than the present, spot price. They can also b