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Hot point?

Buying or selling the contract -- the most actively traded among stock index futures -- is like making a bet.

In this case, it’s a bet on the direction of the S&P 500 index, a broad measure of stock-market changes based on the performance of 500 large companies’ shares.

The contract’s purchase or sale is a legally binding agreement to buy or sell a derivative of the S&P 500 index at a preset price on a preset date.

But if S&P 500 futures are complex, their use as a stock-market forecasting tool remains clear.

Like the S&P 500 index itself, the underlying value of an S&P 500 contract -- whose underlying index represents 80 percent of the value of all stocks on the New York Stock Exchange -- rises and falls based on what traders will pay for it moment to moment.

And because the contract’s terms are settled at a future date, an S&P 500 contract’s price generally leads the S&P 500 index it’s derived from -- on both the upside and the downside.

“The futures give an indication where stocks are likely to go,” said Hans Stoll, a Vanderbilt University finance professor who has studied the contract. “The futures lead the cash.”

As such, an S&P futures quote is to short-term market forecasts what the satellite photo is to weather predictions.

In a study, Stoll found that during the trading day, the futures index leads the regular index by an average of five minutes. Before the opening bell, a similar but less predictable relationship exists.