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How are futures priced?


The price of a futures contract typically moves in tandem with the price of the underlying asset. Its fair value is derived from the current price of the underlying asset taking into consideration storage/holding costs, interest rates, dividends and other factors. Market sentiment plays an important role in futures prices. The price of futures may deviate substantially from its fair value due to short term imbalances in demand and supply during periods of extreme volatility.

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