Trading Single Stock Futures or SSF
If traded properly Single Stock Futures or SSFs are good trading instruments. They are an easy way to own underlying stocks and also give the freedom to easily go short or long and to hedge against risks. Single stock futures are traded in 2 US markets, OneChicago market and Nasdaq Liffe markets.
Single stock futures contracts are standardized contracts having 100 shares of underlying stock with a tick size of $1 and a predefined expiration date. SSF market is liquid and contact prices are always changing with the change in underlying company stock prices. Usually the margin requirement is 20%, but it can differ with brokers. Remember the margin requirement for a position is calculated each day by brokers with changing price of the contact for both buyers and sellers.
With single stock futures, traders can easily take long and short positions. Trading on margin magnify both profit and loss. For example a trader takes a long position for an SSF contract of XYZ stock trading at $10 with just $200 (20% margin). If he offset the position when XYZ is at $13, he will gain $300, which is 150% of the initial deposit; on the other hand if XYZ is at $7, he will suffer a loss of $300, again 150% of the initial deposit. Many traders, who want to keep the position for long-term, usually hedge against loss by taking an opposite position at a desired time to offset the effect of initial position.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
Single stock futures contracts are standardized contracts having 100 shares of underlying stock with a tick size of $1 and a predefined expiration date. SSF market is liquid and contact prices are always changing with the change in underlying company stock prices. Usually the margin requirement is 20%, but it can differ with brokers. Remember the margin requirement for a position is calculated each day by brokers with changing price of the contact for both buyers and sellers.
With single stock futures, traders can easily take long and short positions. Trading on margin magnify both profit and loss. For example a trader takes a long position for an SSF contract of XYZ stock trading at $10 with just $200 (20% margin). If he offset the position when XYZ is at $13, he will gain $300, which is 150% of the initial deposit; on the other hand if XYZ is at $7, he will suffer a loss of $300, again 150% of the initial deposit. Many traders, who want to keep the position for long-term, usually hedge against loss by taking an opposite position at a desired time to offset the effect of initial position.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by Daniel Pipitone at
6:24 AM
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