Skip to main content
This Board Has Moved

This board has been migrated to our new platform! Check out the new home page at discussion.fool.com or click below to go directly to the new Board on the new site.

Go to the New Site
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Fair value is a term used to describe the perceived true value. It's what an investor believes an equity or derivitive to be worth. And, because everyone has a different perception, there is never any one real "fair value". You can arive at an estimate of fair value all sorts of ways: mathematical models, price to earnings ratios, outright guesses, etc. In the context you describe, (I've never watched the program so I can't say for sure) I would surmise that "fair value" probably refers to something dealing with the price of the underlying index and some financial model calculating a theoretical premium for the futures. One such formula often used for options is the Black-Scholes formula. You can go to www.cboe.com to learn more about it. I would imagine some of the same kinds of things go into determining a fair value for futures. Any way you cut it though, fair value will always be different for every person that you have give you an answer as to what it is.
Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.