What is the gross loss from 5,025 to 5,018 on one 50-dollar-point long?
Reveal the worked answer
350.
Seven adverse points multiplied by 50.
Equity Index Futures · FUT-09 · Core
Overnight highs and lows
How do extremes frame the cash open?
What you will learn and prerequisites
- Explain the mechanism in the lesson question.
- Reproduce the worked comparison and recognize its failure case.
Read first: What is an equity index future?
Overnight highs and lows are extrema of a declared pre-cash window. They record where trade traveled, not necessarily where value was accepted. A thin rejected print can set an extreme.
An open inside or outside that range changes the questions, not the requirement to make a trade.
Understand the mechanism
An outside open asks whether new participation accepts the gap or returns into the old region. An inside open can be compared with the prior balance. The reference supplies location rather than certainty.
Keep prior regular-session extremes distinct from completed overnight extremes and from developing current-session values.
Walk through the process
Record the range and its cutoff before the cash open. Calculate distance to its edges and other relevant levels. State how rejection or acceptance would be recognized.
Do not assign stop inventory or dealer intent to those lines without separate evidence.
Operational boundary
All prices, portfolio values and account balances are fictional. Real contract calendars, broker requirements and available liquidity must be checked for the instrument actually traded. The example's mathematical hedge or payoff is not an execution guarantee.
A worked example
The fictional overnight range is 4,990–5,020. New cash-linked activity starts at 5,025, then returns to 5,018. The seven-point decline would lose 350 on one 50-dollar-point long from the opening observation.
The return is inside the prior range. It challenges an outside-acceptance thesis, but the next response still matters. A later reclaim can change the interpretation again.
Overnight highs and lows—worked comparison
Vertical: Futures level
Horizontal: Overnight/opening observation
1. Fictional example
Read the graph as a data table
| Overnight/opening observation | Fictional example |
|---|---|
| 1 | 4,990 |
| 2 | 5,010 |
| 3 | 5,020 |
| 4 | 5,015 |
| 5 | 5,025 |
| 6 | 5,018 |
What would invalidate the reading?
Using future cash-session highs to calculate an overnight boundary introduces information unavailable at entry. Assuming every gap continues ignores rejection.
Check your understanding
Try the question before revealing its answer. These are reading checks, not trading certification or a site completion record.
What is the critical failure to avoid?
Reveal the worked answer
Using future cash-session highs to calculate an overnight boundary introduces information unavailable at entry. Assuming every gap continues ignores rejection.
Explain this risk before treating the example as a decision rule. A correct calculation does not guarantee a favorable market outcome.
Return to the question: How do extremes frame the cash open? State the observed facts, the assumptions and the failure condition separately.
Sources, assumptions and downloadable script
External references support definitions and conventions. Worked scenarios and prose are original. No current quotes or dealer inventory are claimed.
Read this lesson as Markdown · Download its JavaScript content module