Single-stock Futures

Single-stock Futures

Single-stock Futures (SSFs)

In finance, a single-stock future is a type of between two parties to exchange a specified number of stocks in a company for a price agreed today (the futures price or the strike price) with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange. The party agreeing to take delivery of the underlying stock in the future, the "buyer" of the contract, is said to be "long", and the party agreeing to deliver the stock in the future, the "seller" of the contract, is said to be "short". The terminology reflects the expectations of the parties - the buyer hopes or expects that the stock price is going to increase, while the seller hopes or expects that it will decrease. Note that the contract itself costs nothing to enter; the buy/sell terminology is a linguistic convenience reflecting the position each party is taking (long or short).

SSFs are usually traded in increments/lots/batches of 100. When purchased, no transmission of share rights or dividends occurs. Being futures contracts they are traded on margin, thus offering leverage, and they are not subject to the short selling limitations that stocks are subjected to. They are traded in various financial markets, including those of the United States, United Kingdom, Spain, India and others. South Africa currently hosts the largest single-stock futures market in the world, trading on average 700,000 contracts daily.

Read more about Single-stock Futures:  SSFs in The U.S., Pricing

Other articles related to "futures":

Equity Derivative - Equity Futures, Options and Swaps - Single-stock Futures
... Single-stock futures are exchange-traded futures contracts based on an individual underlying security rather than a stock index ... Their performance is similar to that of the underlying equity itself, although as futures contracts they are usually traded with greater leverage ... holders of long positions in single stock futures typically do not receive dividends and holders of short positions do not pay dividends ...
Single-stock Futures - Pricing
... Single stock futures values are priced by the market in accordance with the standard theoretical pricing model for forward and futures contracts, which is where F is the ... The value of a futures contract is zero at the moment it is established, but changes thereafter until time T, at which point its value equals ST - Ft, i.e ... stock minus the originally established cost of the futures contract ...

Famous quotes containing the word futures:

    One of the things that is most striking about the young generation is that they never talk about their own futures, there are no futures for this generation, not any of them and so naturally they never think of them. It is very striking, they do not live in the present they just live, as well as they can, and they do not plan. It is extraordinary that whole populations have no projects for a future, none at all.
    Gertrude Stein (1874–1946)