Single stock futures trading us
Single-stock futures - Wikipedia
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These are called single stock futures, or in their abbreviation SSFs. Although futures on individual stocks have been trading in other countries— primarily England, and South Africa — for quite some time, here in the United States they were banned until the year So here in the States these contracts are fairly new as they have only been traded for about 13 years.
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Single stocks futures work exactly like traditional futures in that they are an agreement between two parties, the buyer who promises to pay a specified price at a predefined date for an individual stock, and the seller who is obligated to deliver the stock with same stipulations. The difference is that unlike traditional futures contracts that vary in quantity, and quality of the underlying asset, these contracts control a fixed shares of the underlying stock regardless of the company being bought or sold.
Names like IBM, Microsoft, Wal-Mart and Apple are just a few. In addition, Exchange traded funds have been gradually added over the last few years.
Similar to traditional futures, these contracts expire on a quarterly basis for SSFs on ETFs with two additional serial months added in for stocks.
Because the margin is fixed it is calculated everyday so one needs to monitor this very closely as a big gap in the underlying stock can dramatically change the margin requirements. One of the advantages of SSFs over purchasing a stock outright is the leverage.
But as we know, leverage can cut both ways so make sure you use stops and only implement a low-risk strategy when trading SSFs. In the earlier example, if we sold Apple for a profit, our rate of return over buying the stock outright would be more attractive because of the leverage. In addition, shorting SSFs is less cumbersome than individual stocks because there are no shares to borrow.
The only drawback is the dynamic margins which have to be monitored. In conclusion, single stocks futures are flexible vehicles that can be used in lieu of stock to speculate, hedge, and are much easier to short than equities.
For information on symbols and expiration months please go to the OneChicago website here. And as always, please understand the risks involved in trading any product before you put even a penny at risk. Celebrating 20 Years Transforming Lives for Two Decades Online Trading Academy has its roots in the largest trading floor in the Western US, founded in by Eyal Shahar. Learn Programs Core Strategy Extended Learning Track Mastermind Community Specialty Courses Assets Stocks Forex Futures Options.
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Home Resources Lessons from the Pros Single Stock Futures Futures September 24, Single Stock Futures Explained Gabe Velazquez Instructor. Disclaimer This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever.
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Single Stock Future (SSF)
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