Futures Prices Depend on Contract Specifications and Market Pricing

Summary

The question asks whether futures prices are determined by buying and selling interest, the underlying spot price, and time to expiry. The response says these are sufficient when the contract’s price semantics are included. In other words, interpretation depends on what the futures contract specifies about how its price is defined.

The answer is brief and offers no pricing equation, examples, or discussion of factors such as financing, storage, or convenience yield. It is best read as a reminder to account for the contract’s specification when describing price formation, rather than as a detailed model of futures pricing.

Key ideas

• Futures price formation must be understood in the context of the contract specification.
• The response treats market demand, the underlying, time, and price semantics as the relevant factors.
• The answer provides no detailed pricing model or examples.

Tags

# Are the buy/sell demand, the underlying spot price and the time value, the only factors in futures contract price?


# Are the buy/sell demand, the underlying spot price and the time value, the only factors in futures contract price?












Are the buy/sell demand on the future contract, the underlying spot price and the time value (days to expiration and the accelerating decay in backwardation or rising in contango, coefficent ) are the factors of the future contract price ?

## Answer by ThatDataGuy (score 1)

https://quant.stackexchange.com/a/69697

If you include the actual specification of the price semantics (ie, the contract specification), then yes. That's it.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.