My understanding is that these things will only work in a certain trading range, otherwise the contracts would not make sense.
Basic economic analogy - If I can make a widget for $10 and the market for widgets drops so I can only sell it for $8, I will sell at a loss if I must, but will not make any more.
SAJ had a detailed explanation in post #13. Thoughts, SAJ?
As regards this market being somehow rangebound by rule, I shouldn't think so. It will only be ''rangebound'' in the sense that there are ''price'' levels of the index, both higher and lower, that will be effectively impossible to reach in the real world. Zero, for one.
BTW, if you're a widget manufacturer punching out widgets at $10, then -- before any collapse -- presumably you've been able to sell them for $11, else you're already out of business, right? What you should do in terms of widget futures is to pre-sell your forward production by selling for future delivery. Then, you won't have to fret for a time about the mkt going to $8.
Bad luck, of course, if there doesn't happen to be a widget futures mkt (g!).