How it works
A premium means market price exceeds NAV; a discount means it is lower. Calculate either as (market price / NAV − 1) × 100%. The NAV belongs in the denominator. Be explicit about whether the price is a last trade, bid, ask or midpoint and when it was observed.
For many funds, official NAV is a daily valuation while trading continues intraday. If underlying markets are closed, their latest prices can be stale relative to new information. An indicative intraday value is also an estimate, not a promise that every portfolio holding can trade at that value.
Worked example
Suppose a fictional fund has assets of 102 million, liabilities of 2 million and 5 million shares. NAV is 20 per share. A market price of 20.30 is a 1.5% premium; 19.80 is a 1% discount. If NAV later remains 20 while price falls from 20.30 to 20, the buyer loses about 1.48%, before costs, solely from that price change.
Interpretation and limits
Creation and redemption mechanisms can encourage alignment, but spreads, market stress, valuation uncertainty and trading restrictions can sustain differences. A discount does not guarantee convergence or an immediate arbitrage opportunity for a retail investor. Fund structure and the actual valuation timestamp matter.
Chart practice
Compare an available closed daily ETF bar with the issuer's NAV for that same valuation date, separately checking timestamps and distribution adjustments. Student Wyckoff Pro analyzes available charts; the chart itself does not establish NAV, portfolio holdings or the price available for an actual order.
Primary sources
Sources explain the mechanics and limitations; the editorial examples use invented numbers rather than market quotations.
Your next practical step
Continue with analysis of available closed daily, weekly and monthly bars.
Open the first-chart instructions ↗