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I have read that the E-Mini S&P 500 Futures trade 24/7, how is that possible?

I mean the underlying stocks which form the index are traded from 9:30am-4pm - so outside of these hours the S&P 500 index doesn't change (in my understanding). So how can then the futures be traded - or maybe the better question: why does it makes sense to trade the futures outside the normal market hours when the underlying value doesn't change?

Thanks

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Theoretically "information" about stock prices is still arriving (including information about developments outside the United States) and the futures market is doing its best in estimating what the price of the index would be if it was trading. In practice, during the night, traders are following the foreign markets (Europe, Asia) and adjusting the price of the futures accordingly. No arbitrage is possible since the US stock market is closed, but that does not prevent an estimate of US stock market value from being generated.

By the way they don't really trade 24 hours, there is a pause between 16:15 and 16:30 New York time and another pause between 17:15 and 18:00. So 23 hours of trading and 1 hour to rest, reset the computers, and get ready to start again.

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  • $\begingroup$ Thanks for your answer, for me as a beginner it's really hard to understand how the price mechanism works (what drives the price). So i was thinking that the futures follow the actual index (which is based on the stocks prices). But would it be possible that e.g. the overnight futures price increases heavily and so the people expectations are bullish and this drives the actual index upwards? So basically it's not a one sided game that only the index drives the futures price but a two sided so that a high futures price can influence the actual index (whichever which "force" is greater(i.e.vol)) $\endgroup$ – Lukas Jun 2 '15 at 14:44
  • $\begingroup$ Yes, It is not one-sided but two-sided interaction between stock prices and futures prices. $\endgroup$ – noob2 Jun 2 '15 at 15:07
  • $\begingroup$ During the 2016 US Presidential election, futures traded with insane volumes and volatility around midnight NYSE time. $\endgroup$ – Gascoyne Nov 23 '16 at 5:21
  • $\begingroup$ Volatility was insanely sane! $\endgroup$ – mementum Dec 30 '18 at 13:24
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Because in the time interval expectations change (due to news etc.).

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