The Traderszone Network

Published in TZ Latest News 29 September, 2017 by The TZ Newswire Staff

Why do stock index futures drive the prices of stock indices given that they’re derivatives?

Someone told me that index futures can drive and lead the price movement of the underlying stock indices. Given my limited experience with futures, I am puzzled. My textbook knowledge tells me that index futures are derivatives of stock indices. Therefore, futures prices are derived from stock indices. It should be indices that drive and lead futures. Logically, there should not be price feedback from futures back to stocks.

Can the more savvy members here tell me what did I miss?