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To: Lizzie Tudor who wrote (34431)	4/18/1999 6:43:00 PM
From: accountclosed	Respond to of 86076

Ok The cash s&p is S&P 500 1319.00 quote.yahoo.com the spoo is S&P 500 JUN99 1324.90 +190 cme.com the current spoo is a jun contract. traders have models of what fair value of the futures contract is...variables include cost of funds, time to expiration, dividends to be paid on s&p in the interim. Bloomberg terminals and other services tell you what fair value for the contract is...and cnbc/cnn tell you in the morning that fair value is a plus or minus whatever. here is a site that gives fair value differential between the cash and the spoo programtrading.com however it is still showing friday. what it means is what should the spread be between the two. there is a buy target and a sell target...the reason for these variances from fair value is both execution costs and slippage in transacting the deal. in other words if the cash and the future get out of sync you can long one and short the other to capture the difference. if the cash were 1319 and we could lock in a june sale at 1400...we would jump all over that guaranteeing a nice profit...thus the two are locked together...sometimes the futures lead and other times the cash leads...i asked meehan one time whether he monitored which leads on given days, and he said he did.