Single-stock futures

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In finance, a single-stock futures and options trading in nsew SSF is a type of futures contract between two parties to exchange a specified number of stocks in a company for a price agreed today the futures and options trading in nsew price or the strike price with delivery occurring at a specified future futures and options trading in nsew, the delivery date.

The contracts are traded on a futures exchange. The party agreeing to take delivery of the underlying futures and options trading in nsew 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.

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 averagecontracts daily. In the United States, they were disallowed from any exchange listing in the s because the Commodity Futures Trading Commission and the U. Securities and Exchange Commission were unable to decide which would have the regulatory authority over these products. After the Commodity Futures Modernization Act of became law, the two agencies eventually agreed on a jurisdiction-sharing plan and SSF's began trading on November 8, Two new exchanges initially offered security futures products, including single-stock futures, although one of these exchanges has since closed.

Inthe brokerage firm Interactive Brokers made an equity investment in OneChicago and is now a part-owner of the exchange.

Single stock futures values are priced by the market in accordance with the standard theoretical pricing model for forward and futures contracts, which is:. Note the value of r will be slightly different in the two equations. 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 S T - F ti. From Wikipedia, the free encyclopedia. Energy derivative Freight derivative Inflation derivative Property derivative Weather derivative.

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An option is a contract which gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price within a specific period of time. A Call option gives the holder the right, but not the obligation, to buy the underlying security at a specified strike price on or before a specified date.

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