Futures on a Single Stock

Futures on a single stock, or single stock futures, are contracts on one item and that single item is a stock. It is not unusual for the single stock investment to be on batches of 100 at a time. The overall behavior is just like a futures contract [1] in that a delivery date is established with a specified price for the stock to be delivered at.

Futures on a single stock are also referred to as SSFs and what they do is increase the capabilities that the investor has to create leverage for themselves. Futures on a single stock can also be traded on margin, which is something that a lot of investments do not offer their investors. [1]They don't have any short selling limits that exist with stocks, so more flexibility is offered.

Flexibility is something that many investors in the futures market are looking for rather than being restricted by what they can do with an investment. Plus, investors want to make their money grow as fast as they can make it grow and futures can prove to be a great investment.

Regulation

In the 1980s, SSFs were no longer allowed because the Security and Exchange Commission (SEC) and the Commodity Futures Trading Commission couldn't decide who would have jurisdiction over the futures. Although they were futures, which are what the Commodity Futures Trading Commission deals with, they were also stocks, which is within the SEC's jurisdiction. A decision was finally reached in 2002 when the two agencies decided that they needed to share jurisdiction since they both had an interest in this investment type. This was great news for the investor because it meant that investors could acquire additional leverage.

Since the two regulatory agencies decided that they were to share responsibility, futures on a single stock has been growing in popularity amongst investors. Securities and derivatives traders are especially fond of these investments.

OneChicago

OneChicago is an exchange that SSFs are traded on. Since they have their own exchange, the investing and trading of equity products through futures has become more organized throughout the years.

OneChicago can also offer you information on stocks that you can invest in a part of SSFs. Nevertheless, you may need the assistance of a financial advisor in order to make the trades successful. A financial advisor can help you choose the right stocks so that you can make the best out of your investment.

There are four expiration quarters throughout a year, which is every three months. You want to be able to capitalize on your investment during these quarters. This makes SSFs fast investments. And because you can borrow on margin, you can buy what you need when you need it.

Futures use certain formulas that calculate price and a delivery date has to be established in order to receive delivery of the funds or stocks that have been accumulated throughout the contract. Where futures usually trade commodities such as wheat or coffee, you are dealing with stocks in this instant and stocks gain value and are investments that can physically bring you money, so you want to make sure you invest right. You can also talk to your financial advisor about a long margin account in stock so that you can borrow the money needed to buy stocks.

There are many aspects to investing and you want to make sure you are aware of them so that you can make your investments. If you are interested in a long margin account or futures on a single stock, talk to your advisor about this and see how it will work for you in growing your money.


[1] http://www.investopedia.com/terms/s/singlestockfuture.asp 06/29/2010

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