# Overnight highs and lows

**FUT-09 · Equity Index Futures · Core**

**Lesson question:** How do extremes frame the cash open?

Original fictional examples; educational writing, not live market data, orders or production approval.

## By the end

- Explain the mechanism in the lesson question.
- Reproduce the worked comparison and recognize its failure case.

**Prerequisites:** FUT-01

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.

## Graph: Overnight highs and lows—worked comparison

**Horizontal:** Overnight/opening observation  
**Vertical:** Futures level

Fictional data from the written example. The chart organizes the comparison; its shape is not a forecast.

Complete numerical data are embedded in `scripts/equity-futures/FUT-09.js` and displayed as an accessible table in the HTML lesson.

## 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

### What is the gross loss from 5,025 to 5,018 on one 50-dollar-point long?

**Answer:** 350.

**Why:** Seven adverse points multiplied by 50.

### What is the critical failure to avoid?

**Answer:** Using future cash-session highs to calculate an overnight boundary introduces information unavailable at entry. Assuming every gap continues ignores rejection.

**Why:** Explain this risk before treating the example as a decision rule. A correct calculation does not guarantee a favorable market outcome. **Critical risk check.**

## Takeaway

Return to the question: How do extremes frame the cash open? State the observed facts, the assumptions and the failure condition separately.

## References and provenance

The cited references support definitions and conventions. The teaching prose, tickets and numerical scenarios are original; they are not attributed as historical market observations.

- [CME Introduction to Futures](https://www.cmegroup.com/education/courses/introduction-to-futures)

- [CME Micro E-mini overview](https://www.cmegroup.com/education/courses/micro-e-mini-futures/micro-e-mini-futures-products-overview)