the question about spx index in relation to its futures. i post it here because it is necessary to explain how to hedge the mortgage rate as free2005 often asked here. Per futures definition, it equals to the cash index price plus the carry cost minus dividend index received. The carry cost here is the risk free interest rate. That is: Futures = Index + Interest - Dividend. When interest (when rate is high) is great than dividend, futures price will carry a positive premium, for example, it was at 14 points premium at end of 2007 for 3 month futures. On the other hand, when dividend is great than interest (when rate is low such as now), then futures will carry a negative premium such as now at 2.5 points for 3 month futures. Meantime, index options in relation to futures options will have to adjust this premium as well. During the regular trading session, under no circumstance should this relationship widen a lot, or arbitragers will move in instantly through program trading. After hour trading often leads to wide spread due to illiquidity of the each component of the index. When approaching the futures expiration, index and its futures will converge and eventually settle at same price.