Candlestick Trading Blog

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Single stock futures began trading in November of 2002 and are a fairly new investment concept. A single stock future is a futures contract with the underlying asset of one particular stock, typically in groups of 100. When it is purchased by the investor, no transmission of share rights or dividends occurs. They behave exactly like futures contracts and they can be traded on margin. They give investors the ability to leverage themselves within the market and they are not subject to the short selling limitations that stocks are subject to (see short selling stocks).  

A single stock future is traded in many different financial markets in different parts of the world. It can be traded on the United States markets, Spain's markets, India's markets, the United Kingdom's markets, South Africa's markets and more. In fact, South Africa currently traded an average of 700,000 contracts daily making it the largest single stock futures market in the world.

 

There are advantages to single stock futures as well that we discuss below.

Single stock futures have not yet gained popularity in the United States compared with other countries. In fact the total contract volume previously averaged about 26,000 contracts per day in December 2005. Investors anticipate that this type of trading may increase in the future. Investors should research futures trading more before jumping into single stock futures. At least a basic futures education and stock market education are necessary to investing in single stock futures.