Premium refers to the price at which the futures price is higher than the underlying index. When the stock index futures price is higher than the underlying index, it is called futures premium. Premium usually occurs when the market is optimistic about the future stock market trend. Investors believe that the stock market may continue to rise, so they are willing to buy stock index futures at a higher price. The premium reflects the market's bullish sentiment towards the stock market.
Discount refers to the price that the futures price is lower than the underlying index. When the price of stock index futures is lower than the underlying index, it is called futures discount. Discount usually occurs when the market is pessimistic about the future stock market trend. Investors think that the stock market may continue to fall, so they are willing to sell stock index futures at a lower price. The discount reflects the market's pessimism about the stock market.
It should be noted that premium and premium are dynamic and will change with the change of market sentiment. In the process of trading, investors need to pay close attention to the changes of premium and discount in order to better grasp the market trends and investment opportunities. At the same time, premiums and discounts can also be used to measure market sentiment and investor confidence, thus providing valuable reference information for investors.