Tour de Finance: What are Single Stock Futures?

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A single stock futures contract is contract on a single stock. It can be utilized in much the same way as stock index futures, by hedging against market direction that might affect the value of your original stock, while still maintaining that stock in your portfolio, you don’t have to sell your stocks to benefit.

Finally, single stock futures are used as substitutes for entering stock equities and stock options markets. With ease of entry and exit of positions, it is oftentimes the preferred method for those traders who are willing to be a little more creative in the way they approach the marketplace and the options open to offsetting negative events.

Overview of SSF vs. Old Fashioned Equity

Single Stock Futures Stock Equity No Prospectus rquired. Fewer legal documents. Prospectus must be available on stocks and, therefore, is an additional cost passed on to the investor Global investing will be easier with exchange fungibility Global trading of equities is expensive with the transfer of certificates and safekeeping Easier and cheaper than a synthetic short future Synthetic short futures is possible with equity positions (sell a call and buy a put) Transparent price dissemination in Exchange Traded Funds Prices are traditionally less transparent with specialists and manual transactions Futures brokers are federally regulated Securities brokers are burdened with registering state-by-state

To obtain a copy of the disclosure statement for security futures products, Click Here. Security futures products and futures trading are not suitable for all types of investors. There is a substantial risk of loss in trading futures and options.