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Fancy Way to Say: Not over or under valued The 'true' difference between the S&P cash index and the futures. While the S&P futures represent the stocks in the S&P500, the price also represents an interest premium as a futures is a contract for delivery at some date in the future. Thus, there is an opportunity cost to holding all the stocks in the S&P500 now versus just holding a contract to own them. Since a futures contract wouldn't tie up nearly as much cash as holding the stocks, this 'interest' would could be earned on the funds is represented in the premium at which the futures trade above the cash index. Fair Value is often expressed as a number, or premium, over cash. For example, if the cash index stands at 1200.00 and fair value is 13, this states the futures should be at 1213.00. If the futures are higher, meaning the premium is above fair value, stocks are undervalued. Conversely, if the futures are lower, it means the premium is less than fair value and stocks are overvalued.