Welcome to Ask Fear and Greed, where we take your questions and do our best to answer them. I'm Michael Thompson, and good afternoon, Sean Aylmer.

Welcome to Ask Fear and Greed, where we take your questions and do our best to answer them. I'm Michael Thompson, and good afternoon, Sean Aylmer.

Good afternoon, Michael.

Good afternoon, Michael.

Sean today. I was going to describe this one as a bit of a doozy, but there's a bit to it. It comes from Linus today's question. He's sent it in via the website. There's multiple options. You can do it by Facebook or Instagram LinkedIn all the website fearangreed dot Com. Today you which is what Linus has done. He says, Good morning, Michael, and Sean put me first. Please don'te that. Sean says, gentlemen, a question, if I may Each weekday, the markets refer to the ASEX open via the asx SPI futures futures contracts. But what are the actual futures contracts? What constitutes futures contracts? And what do they measure? Or perhaps more correctly, how do the futures manifest themselves as a points measure? I'm presuming that there is an index that allows a points measure to be compared on a moving basis day to day. He says, thank you, gentlemen, and he says, well done to you both, and the young Adam Lang referring referring to our colleague who judges us on the Fear and Greed Weekend edition. It's been many many moons since Adam lanyone you, young Adam Lange anyway, is not here to defend himself, so I won't sled you any further. Sean, what do you think of this question?

Sean today. I was going to describe this one as a bit of a doozy, but there's a bit to it. It comes from Linus today's question. He's sent it in via the website. There's multiple options. You can do it by Facebook or Instagram LinkedIn all the website fearangreed dot Com. Today you which is what Linus has done. He says, Good morning, Michael, and Sean put me first. Please don'te that. Sean says, gentlemen, a question, if I may Each weekday, the markets refer to the ASEX open via the asx SPI futures futures contracts. But what are the actual futures contracts? What constitutes futures contracts? And what do they measure? Or perhaps more correctly, how do the futures manifest themselves as a points measure? I'm presuming that there is an index that allows a points measure to be compared on a moving basis day to day. He says, thank you, gentlemen, and he says, well done to you both, and the young Adam Lang referring referring to our colleague who judges us on the Fear and Greed Weekend edition. It's been many many moons since Adam lanyone you, young Adam Lange anyway, is not here to defend himself, so I won't sled you any further. Sean, what do you think of this question?

It's good, it's good. It's good. I think he's answering the question himself, though, So what's a future's contract? It's all it is is a contract, an agreement to buy or sell an asset at a specific price on a specific date in the future. That's why it's futures. So you could be a commodity, it's the future's contract for gold. Could be equity, which is what we the spy SPI. It could be some other financial instrument. So these indexes cover all sorts of different classes. They used to be for institutional shareholders for a bunch of reasons you'll come to in a moment. Though nowadays people can trade on the ax SPI futures spy futures, so you can buy onto that. It is just an index. So when Linus talks about an index, it allows the points measure to be compared on a moving basis day to day. That's exactly right. So it's just an index, like the AX is an index. But what it is is measuring how people are viewing and buying and selling futures contracts. And remember futures contracts. So what today's Tuesday, It's just I'm just saying in the first Tuesday in January a month's time, I want to buy a BHP or sell BHP for a certain price. So that's all that does. Why do we use them? So it allows you to be on the direction of a market without actually putting as much money up. So if I want to buy my BHP shares or I want to go into into a contract, and let's say BHP, let's say's trading at thirty bucks. Let's say, and I think it's going to be thirty five bucks. So I might enter a futures contract to buy BHP shares in a month's time. It costs the thirty and I set the price today about what I'm going to pay in a month's time. That's probably the important part there. So that kind of you can bet on benefiting from BHP if you think that it's going to rise and it's cheaper now than you can take a bet on that. So that's one way. That's one benefit of it. Another thing is if I own lots and lots of BHP stock, maybe I've got too much BHP stock, So maybe I want to take a bet that I'm going to sell my BHP shares in a month's time just to offset the fact that I own so many of them. So that's another reason that people tend to hold futures contracts, the SPY two hundred futures. That was another part of it. I mean that that is kind of there's a numerical thing. Off the top of my head. I think it's like twenty five dollars in cash for each index point, and so the value of the market is worked out on that, and that's how you work out your SPY futures contract. I'm not quite sure that I'm answering the question.

It's good, it's good. It's good. I think he's answering the question himself, though, So what's a future's contract? It's all it is is a contract, an agreement to buy or sell an asset at a specific price on a specific date in the future. That's why it's futures. So you could be a commodity, it's the future's contract for gold. Could be equity, which is what we the spy SPI. It could be some other financial instrument. So these indexes cover all sorts of different classes. They used to be for institutional shareholders for a bunch of reasons you'll come to in a moment. Though nowadays people can trade on the ax SPI futures spy futures, so you can buy onto that. It is just an index. So when Linus talks about an index, it allows the points measure to be compared on a moving basis day to day. That's exactly right. So it's just an index, like the AX is an index. But what it is is measuring how people are viewing and buying and selling futures contracts. And remember futures contracts. So what today's Tuesday, It's just I'm just saying in the first Tuesday in January a month's time, I want to buy a BHP or sell BHP for a certain price. So that's all that does. Why do we use them? So it allows you to be on the direction of a market without actually putting as much money up. So if I want to buy my BHP shares or I want to go into into a contract, and let's say BHP, let's say's trading at thirty bucks. Let's say, and I think it's going to be thirty five bucks. So I might enter a futures contract to buy BHP shares in a month's time. It costs the thirty and I set the price today about what I'm going to pay in a month's time. That's probably the important part there. So that kind of you can bet on benefiting from BHP if you think that it's going to rise and it's cheaper now than you can take a bet on that. So that's one way. That's one benefit of it. Another thing is if I own lots and lots of BHP stock, maybe I've got too much BHP stock, So maybe I want to take a bet that I'm going to sell my BHP shares in a month's time just to offset the fact that I own so many of them. So that's another reason that people tend to hold futures contracts, the SPY two hundred futures. That was another part of it. I mean that that is kind of there's a numerical thing. Off the top of my head. I think it's like twenty five dollars in cash for each index point, and so the value of the market is worked out on that, and that's how you work out your SPY futures contract. I'm not quite sure that I'm answering the question.

I think so it feels like there there are multiple parts to it, And what I kind of took partly is kind of how is this used to predict where the market is going to go? When the market opened each day because.

I think so it feels like there there are multiple parts to it, And what I kind of took partly is kind of how is this used to predict where the market is going to go? When the market opened each day because.

You often yeah, okay, so I haven't actually addressed that, and we will often say on a Monday morning, you know, futures trading suggests blah, and what it means is over the weekend or you know, fright following Wall Street, people have taken out contracts and they expect the market to open down and it may or may not do that. Often often it actually follows the futures contract in the first few minutes, but then lots of news hits and people report to the AX and so it either continues that way or as the opposite way. So quite often you see this change in direction where futures saying this, but because of the news of the day, it turns out the opposite.

You often yeah, okay, so I haven't actually addressed that, and we will often say on a Monday morning, you know, futures trading suggests blah, and what it means is over the weekend or you know, fright following Wall Street, people have taken out contracts and they expect the market to open down and it may or may not do that. Often often it actually follows the futures contract in the first few minutes, but then lots of news hits and people report to the AX and so it either continues that way or as the opposite way. So quite often you see this change in direction where futures saying this, but because of the news of the day, it turns out the opposite.

I was never sure how much of those predictions was based on kind of futures and how much was based on just the raw performance of say Wall Street and the leading that you get from from that market.

I was never sure how much of those predictions was based on kind of futures and how much was based on just the raw performance of say Wall Street and the leading that you get from from that market.

Yeah, where the big difference is. So futures do reflect Wall Street often, So that's true. But what futures buyers and sellers don't know is whatever's going to come out on the AX in the morning that opens at eight am. Trading starts at ten am. There's two hours worth of news. And if something like yesterday we ended up with Northern Star coming out buying Degray Mining, right, if you had actually thought the Gray Mind is not going to do very well over the next two months, I'll take a future's contract. You would really have done your money big time. But if you had bought them, you'll do really well out of it.

Yeah, where the big difference is. So futures do reflect Wall Street often, So that's true. But what futures buyers and sellers don't know is whatever's going to come out on the AX in the morning that opens at eight am. Trading starts at ten am. There's two hours worth of news. And if something like yesterday we ended up with Northern Star coming out buying Degray Mining, right, if you had actually thought the Gray Mind is not going to do very well over the next two months, I'll take a future's contract. You would really have done your money big time. But if you had bought them, you'll do really well out of it.

I reckon, I reckon. We've answered Linus's question. I'll say that much. I reckon, we have probably answered a few questions that weren't actually asked as well.

I reckon, I reckon. We've answered Linus's question. I'll say that much. I reckon, we have probably answered a few questions that weren't actually asked as well.

I apologize.

I apologize.

No, it's good. It's an educational experience. One day we will look back in ten years time and we will have ten years worth of ask fear and greeds. Yeah, and you could basically just take them into any university and just go here you go, guys, here, here's the syllabus.

No, it's good. It's an educational experience. One day we will look back in ten years time and we will have ten years worth of ask fear and greeds. Yeah, and you could basically just take them into any university and just go here you go, guys, here, here's the syllabus.

That one's good. I wouldn't listen to that one.

That one's good. I wouldn't listen to that one.

Skip that one. I don't think they knew what they were talking about in that one. Yeah, oh, this is what not to write in your example. That's it anyway, Look, thank you very much Linus for the question, Thank you Sean for answering it.

Skip that one. I don't think they knew what they were talking about in that one. Yeah, oh, this is what not to write in your example. That's it anyway, Look, thank you very much Linus for the question, Thank you Sean for answering it.

Thank you Michael.

Thank you Michael.

Now, if you have your own question that you would like us to tackle, and you can make it as tricky as you want, and you can ask as many sub questions as you want as well as Linus did, then please send it on through do as lanas did, head to fearangreed, dot com, dot a you pop your question in there, or go to Facebook or LinkedIn or Instagram, any of the social media platforms. Send us through a message and we will put it on the list. Thank you very much for listening. I'm Michael Thompson and this is Ask Fear and Great

Now, if you have your own question that you would like us to tackle, and you can make it as tricky as you want, and you can ask as many sub questions as you want as well as Linus did, then please send it on through do as lanas did, head to fearangreed, dot com, dot a you pop your question in there, or go to Facebook or LinkedIn or Instagram, any of the social media platforms. Send us through a message and we will put it on the list. Thank you very much for listening. I'm Michael Thompson and this is Ask Fear and Great