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Security futures is the term used to collectively describe futures on individual stocks and Exchange Traded Funds (ETFs). These products are now trading in the U.S. and represent an important new tool for professional traders. Security futures enable money managers, proprietary trading operations and other investors to efficiently execute a variety of trading strategies for U.S. listed equities.
When a security future is traded, both the buyer and seller put up a good faith deposit called margin. Margin requirements are generally 20% of the cash value of contract, although this requirement may be lower if the investor also holds certain offsetting positions in cash equities, stock options or other security futures in the same securities account.
Single Stock Futures (SSF) are futures contracts on individual stocks. OneChicago lists futures on more than 130 well-known stocks such as IBM, Qualcomm and Microsoft. In late 2000, the U.S. Congress passed legislation lifting the ban on these products, which were already trading in Europe and elsewhere.
A OneChicago single stock futures contract is an agreement for delivery of shares of a specific stock at a designated date in the future, called the expiration date. The size of a OneChicago single stock futures contract is 100 shares of the underlying stock.
ETF Futures are futures contracts on Exchange Traded Funds. They have similar characteristics to single stock futures, although the underlying security is the fund itself rather than common stock in a specific company. Thus at expiration, the deliverable assets are shares in the underlying ETF.
For a list of single stock and narrow based indice futures contacts, including contract specifications, You can access OneChicago’s resources free of charge.
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