Single Stock Futures. A traders guide

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Founded in and headquartered in Plantation, Florida, Trade Station is apt for sophisticated traders. The firm offers free premium tools and real time data, charging no fees for software. The firm also offers customized trading solutions for both international and domestic institutions. Discount trading is a no thrills futures trading broker that offers a multitude of options available to start trading. Low commissions, no inactivity fees, and powerful platforms to start trading.

This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees.

Stock Futures: Everything You Need to Know to Start Investing

Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients. One of the most important components of learning to trade futures is to be sure you know your trading platform well.

Novice traders sometimes make a huge mistake by not developing a trading plan before they trade.

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This can be one of the most challenging aspects of learning to trade futures. Here are some questions to ask yourself:. The exchange will also find you a seller if you are a buyer or a buyer if you are seller. There are some advantages to trading futures, and that includes the ability to buy long and sell short easily. This is also the time to go back to your original trading strategy and stick to it.

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  7. This diagram showcases a step-by-step overview of how to handle stock futures trades on expiration and before expiration:. When it comes down to it, in trading you only have real control over two things: your entry and your exit. The difference between the two is your risk. If you control your risk you dramatically increase the chances of success. With the characteristic of futures contracts, investors can profit from both bull and bear market. Single Stock Futures was first launched on November 24th, The maximum amount of contract any investor may hold on one side of the market in any contract month or all contract months combined may not exceed the Position Limit as announce by TFEX.

    Please refer to the procedures of listing of Derivatives Contracts for the official contract specification. Follow us. Single Stock Futures. That need may vary from one market to another but is always there. Precisely the same is true of SSFs. In that respect, SSFs can help add liquidity to stocks and ensure they are more reasonably priced than may be possible with stocks that are very prone to being squeezed, due to a lack of stock supply for shorting. In many instances stock market spreads are quite woeful compared with their futures markets cousins in the case of, say, bond or money market products.

    When it comes to price discovery, there is a lot of discussion on how the US stock market actually discovers prices so accurately. Yet, the truth is the US equity market, while presenting a form of united front across the NYSE and NASDAQ, is in fact a hotchpotch of executing platforms, and, in the wake of all the public indignation surrounding the likes of analysts recommendations in recent years, it is remarkable that regulators continue to ignore the worst injustice served upon investors: the fact that their orders may often be exercised on an ECN or some other alternative platform far from the madding crowd of the stock exchange, quite feasibly at a disadvantageous price to the market elsewhere.

    Indeed, nobody can really say quite what the overall stock price is during a session, as trading is in so many disparate places. Of course, one key issue for SSFs proponents which in our view has not been adequately prepared for at the time of writing remains the fact that as soon as there is a major pullback perhaps only a single day sharp fall , SSFs will bear the brunt of the blame for the collapse, as the pro-Uptick reactionaries blame the impact of futures. Equally, those who view futures as products that have enjoyed instant success on every one of their launches overlook many key aspects in the Basics of Single Stock Futures 31 history of organized derivatives markets.

    We remain unconvinced over the claim that US markets have achieved perfection in risk transfer as espoused by many market observers. Indeed, what happens with most markets in which there is a key exchange-listed derivative—the derivative often becomes the benchmark for pricing in the same sort of backward way that we also employ Black—Scholes to give an options price by reintroducing something already in the mix! The reason may be the exchange or it could easily be any of a clutch of ECNs.

    Having said that, people ought to be free to execute what they want where they want. Nevertheless, the argument about SSFs is not about to be settled. With the new US exchanges onstream, it will still take a product development cycle of perhaps 12 to 18 months from their late November launch to see a coherent volume level, which can be regarded as a benchmark to test the success of the marketplace. LIBOR is often a benchmark for many international lending rates. As previously discussed, SSFs date from the 17th century when they were used on the Amsterdam exchange in Holland.

    They then experienced an extended hibernation period, with their listing in Sweden, then Hong Kong, Australia, and then South Africa among others marking their reintroduction a number of years ago. As one of the longest standing advocates of their reintroduction in Europe and the US, it was of course a delight for Patrick Young, co-author of this book, to see LIFFE undertaking their substantial USF initiative in late —a launch with which he remains delighted to have been associated. True, SSFs face some very tough competition in certain jurisdictions. As spread bets and CFDs are both functions of cash-dealing, one can argue there is superior liquidity at the time of writing in the London market compared with the Euronext LIFFE exchange, for instance, but then again the central counterparty clearing of SSFs is a key issue in helping to make the exchange-traded product somewhat safer in terms of overall credit risk.

    Compared with CFDs and similar products, the whole SSFs position of a price encompassing everything is much easier for the end-user to follow. When you deal with a CFD agency, you are utilizing a market-maker who demands a price allowing himself a stage in the process— thus adding to your hidden costs. True, many CFD traders argue this is irrelevant, but with SSFs the problem of anybody being able to recall your position as in large cosmopolitan markets does not arise: it is simply not Basics of Single Stock Futures 33 possible. The Enron collapse wreaked havoc with many folk—such as shipforwarders—whose hedges became worthless overnight.

    With CFD brokers who use a third party market-maker: What happens to your position if the market-maker closes down? Overall, there is simply no reason to believe that a risk transfer mechanism should be based on individual equities any more than it can be based on indices, individual commodities, bond markets, or energy products. Indeed, some individual multinational stocks are arguably already larger than many existing markets on which commodity futures have been based.

    Futures: Contracts & Trading Explained ⏱🔮

    Options The original argument of many in the options trading community was that SSFs could be created synthetically by a combination of calls and puts. This was a very fair assertion, and we will examine synthetic trades in the trading section. However, the basic economics of the situation are not in favour of the end-user.

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    8. Equally, there are often spread brokerage concessions for multi-legged strategies, but a single futures commission is still invariably cheaper. The CFD involves a series of parameters. Essentially, the investor takes on a contract to either buy or sell shares in a framework that may be described as a perpetual or open-ended futures position. You may specify a settlement date on entering a position, although this is relatively uncommon. Obviously, the potentially perpetual nature of a CFD can be very useful for a longer term holder of the position, as there is no need to roll over positions as is the case when futures contracts expire.

      Similarly, dividend payments do not accrue as they would with a cash equity transaction. Usually, market-makers will set a price close to the stock market levels prevailing, although investors need to be careful to monitor what this is and indeed may have limited recourse against a CFD broker, even if they discover their CFD price is not close to the prevailing market level. CFDs are usually packaged by a specialist market-maker, although the position is Basics of Single Stock Futures 35 administered through a broker—which means traders lack the security of a clearing house.

      The one key issue to recall with regard to CFDs is that the introduction of SSFs basically grows the pool for equity derivatives. CFDs will remain a key facet of derivatives-trading for the foreseeable future, but we believe they will be a niche marketplace for the tiers below the absolute topgrade stocks, which will increasingly be catered for with SSFs. Likewise, commissions at somewhere around 0. Therefore, it is quite plausible that the CFD business will continue to expand as a conduit for traders looking at stocks beyond the leading issues traded on exchange. For wholesale investors, such as hedge funds, margin levels can be much lower with rates apparently as low as a few percent.

      CFDs are gradually becoming available in many European and some Asian markets, although US regulators have not yet allowed them to be made available for US investors. Spread-betting in single shares is usually based on quarterly, futures-style contracts, although 36 Single Stock Futures the bookmakers also provide weekly share markets.

      Similarly, investors need to realize that their positions are held by a bookmaker and not by a clearing house, presenting a modicum of credit risk. When it comes to closing the position out, the holder is at the mercy of the price made by the bookmaker, although this ought to be proximate to the share price, as otherwise arbitrage would be possible.

      Equity swaps Equity swaps are very similar in concept to currency or interest rate swaps. A plain vanilla or standard equity swap involves one counterparty agreeing to pay the other the total returns from an equity index in return for the total return from some other asset, which may, for example be, an interest rate. Therefore, equity swaps are a very useful investment vehicle and asset allocation tool.

      In essence, the CFD niche will enjoy very healthy growth for many years to come throughout the world. Naturally, the simplest trades involve simply buying and selling SSF contracts. For investors who wish to exploit strategies that involve more than merely mono-dimensionally hanging on to existing shares, SSFs provide a simple means to trade on the many vagaries of market movements, and we will address some of these strategies later in this chapter. It provides a rich opportunity for any trader to enter the market on the same terms as everybody else.

      Similarly, the price you see on the screen is at least the price currently trading—whereas even the best data vendors are often a fraction behind the actual pit prices. Coupled with the directness of access to options markets such as the International Securities Exchange and the Boston Options Exchange, the prospects for direct, more democratic electronic access to US markets in particular have never looked brighter. If there is no underlying cash market trading, then individual equity derivatives futures and options will not be open to trade on any derivatives exchange, even if that market is open.

      Tables 3. The Euronext LIFFE exchange opens from — on both these days, hence the earlier than usual close in some markets. Above all else, traders need to keep a very close eye on just when their SSFs are going to trade. Although national holidays across Europe are roughly coordinated on some major ecclesiastical e. The only thing we can be utterly certain about is that this list will never be remotely comprehensive. Take a stock such as Microsoft regularly the most traded stock in the initial weeks of business on the US SSFs markets.

      On December 6th, the share price of Microsoft was By January 17th, the stock reaches a price of Obviously, in this example, we can see that both the underlying share price and the futures price have risen. Trading Single Stock Futures 43 In another case an investor believes the price of Microsoft shares is going to fall. The cash stock market is at By January 17th, in this hypothetical example, the stock has fallen to Remember, neither party gets to use the cash from the sold position in cash or SSFs markets, and this margin is an extra charge on top of withholding the margin by the clearing house or clearing broker in the case of the cash stock.

      With futures, you are not going to suddenly turn short-term speculations in to long-term trades with any great ease. Never ever let your losses grow beyond the level you set initially and always set that level pragmatically e. With stock futures, the whole issue of borrowing stock or having dividend liability while short of a cash share is essentially reduced.

      Margin payments are the only ongoing position maintenance you need to make with SSFs, and, in fact, margins are reduced for the relatively lesser risk of spread positions such as pairs trades. Normally, pairs trades take place between two stocks in a similar sector. Also, note that on various exchanges such as Euronext LIFFE , electronic matching technology allows pairs trades to be executed as a strategy trade with both legs being transacted simultaneously, thus reducing execution risks e.

      During the oil sector was particularly volatile. For many weeks both BP and Shell were trading at or around the same price. On July 30th, the December Shell share futures could be sold at pence, while BP could be bought for pence. In other words, BP was 10 pence cheaper than Shell i. Of course, it is often only with hindsight that such a trade could have been exited so perfectly.

      Note that during this period, both shares went ex-dividend for their interim payments on August At gross rates of 6. In this section, we seek to illustrate some core, basic principles. We do not intend to provide detailed tax advice, so readers should not believe they are armed with the minutiae of their own tax regime after reading this section! Nevertheless, some basic principles can be discerned from a few examples: 46 Single Stock Futures Dividend taxes It is often the case that dividends attract a higher rate of taxation for foreign investors.

      Of course, in the case of SSFs, no dividends are payable. Rather the dividend itself is priced into the future. Intriguingly, the actual market price of an SSF can often be somewhere inbetween these two prices, permitting both sets of stock holders the opportunity to make an arbitrage i. Meanwhile, foreign investors holding the stock who pay a higher rate of tax and therefore receive a lower net dividend can buy the futures in the anticipation that the market is actually undervalued relative to their dividend position. Take the following example.

      Non-domestic investors do not receive the same credit. BNP Paribas announces a dividend of 2. The money received on the sale of the shares can also be placed on deposit to earn interest. After the dividend has been paid, the prices are as follows: BNP Paribas share BNP Paribas futures Bid Offer The shares in this instance have still risen during this period despite the dividend being paid. The return from the futures strategy, which pays no dividend, would be 3. The position can then be switched back into long shares to maintain the long investment position, although exposure to long futures means that any capital gains exposure to BNP Paribas shares has been maintained.

      After payment of the dividend, the shareholding would yield a return of 1. The futures position would have produced a loss of 3. Of course, interest costs of 0. Once again this is a highly complex issue and professional accounting advice for your situation and jurisdiction should be sought. However, to illustrate some key principals, we will display some theoretical examples later in this section.

      Overall, the key issue to recall is that SSFs can permit an investor to shift the balance of their portfolio between capital gains and income, while also widening the pool of instruments the investor can have recourse to. As already mentioned, futures contracts do not pay dividends. Therefore an investment in futures can be employed as an alternative to investing in high- 48 Single Stock Futures yield shares.

      By holding an equivalent cash balance on deposit to the value of the underlying shares that could be purchased, you can garner the same total return as would be the case with an underlying share position. In other words, you are not geared to this position. Let us assume that AstraZeneca are due to pay a dividend of 35 pence per share. By switching an underlying equity position into futures, we can reduce the income earned on the investment, but without any impact on our exposure to the stock or the return on our investment: Bid Offer Share p p Future p p The shares are sold at p, and the cash received from the sale is deposited to earn interest.

      An equivalent number of SSFs are purchased at p. Once the shares go ex-dividend, the market prices are as follows: Bid Offer Share p p Future p p So, over the period, holding shares would have resulted in a capital loss of 55 pence with a dividend income of 35 pence to make a net loss of 20 pence. Holding futures would have resulted in a capital loss of 27 pence i. So, the use of futures has here reduced the amount of income accrued by the fund without in any way changing the overall return brokerage costs accepted admittedly. Therefore, portfolio income can be minimized by switching stock positions into futures positions ahead of an ex-dividend date and then switching back into the stock after the stock has gone ex-dividend.

      Total share price exposure is maintained throughout the position. Increasing portfolio income Naturally, the same approach can also be deployed to increase portfolio income e. Instead of buying shares that pay no dividends, depositing cash and buying futures contracts will generate an interest income and therefore a commensurately lower capital gain. Nevertheless, once again the total return will be the Trading Single Stock Futures 49 same as that generated from holding the shares, because SSFs ensure that exposure to share price movements is maintained.

      For example, Intel pays no dividend. After three months, the shares are still worth The futures have narrowed their premium, because time to expiry has grown closer and therefore standing at Therefore, by using futures, we have the same return as investing in the underlying shares in this case, remarkably, a slightly better return, thanks to the premium movement!

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      Tax liabilities are calculated annually in the UK: at the end of a tax year, which runs to April 5th. However, SSFs are very useful in this regard as they enable an investor to sell his stock, while simultaneously buying an SSF to maintain the same exposure. At the end of the day period the UK investor can sell the SSF position once again and buy back the stock to revert to the original position.

      Probably the hardy perennial of many British investors stock portfolios in recent decades has been British Telecom. Alas, in the wake of the telecoms meltdown at the end of the dotcom bubble in , its prospects were dimmed somewhat, and the share demonstrated a remarkable ability to head south, in common, it might be added, with a plethora of other telecom stocks. At present, the UK rules, for instance, preclude a loss or gain being booked for tax reasons where the investor re-enters the same equity within 30 days of exiting it.

      Therefore, in the case of British Telecom, an investor has endured a very tough 18 months holding the stock through almost relentless losses. However, the prospect of selling out and not being exposed to the stock is hardly attractive, because the volatility in telecom shares as all sorts of events such as 3G2 licence goalposts being altered retrospectively along with the underlying nature of the telco marketplace, means that share prices could rebound very rapidly.

      Trading Single Stock Futures 51 discrepancy, but it would be a matter of a few pence. We will examine this particular transaction on p. Of course, investors can buy overseas equities and then utilize currency forwards or futures to hedge any potential losses in the currency. However, a simpler approach may be to buy SSFs instead of the underlying equity, as the margin requirements mean that less capital needs to be converted into the other currency. Initial margin is set in the currency of the contract itself.

      However, most clearing houses accept multi-currency deposits and collateral against margin liabilities. For example, the London Clearing House would permit a US margin liability to be covered by a UK Treasury Bill denominated in pounds sterling or indeed a European government bill denominated in euros, etc. In dollar terms the shares have risen 2. Had the fund manager bought the shares and invested the full value in euros, he would have a loss when he converted his funds back to euros even though the shares had actually risen in price!

      Note also that the fund manager could of course have simply left his initial margin in euros and deposited that with the clearing house. Indeed, investors may be keen to keep their long-term equity holding, but be looking for a short-term readjustment relative to a similar equity in the sector, for instance. This approach also avoids any potential taxation issue in respect of capital gains on the core cash equity holding. This strategy involves the purchase of a share and the sale of a call option—usually at an out-of-the-money strike price.

      The premium income gained from the call option improves the return on the shares. The premium gained from the option remains the same, thus making the return potentially higher in percentage terms than the extent of capital risked i. Of course, investors who want to alleviate the gearing issue can deposit cash equivalent to the value of purchasing the underlying stock, in which case their returns will be enhanced by the interest return on the cash deposited.

      Note also that a short options position that is exercised will result in the seller having to deliver the underlying stock, while many SSFs are cash settled at expiry. However, the problem with simply selling options is that there are potentially unlimited risks if the position goes wrong, and often retail investors are discouraged from entering positions that they might not be able to monitor as regularly as a professional trader.

      As options move closer to expiry, their likelihood of having greater value i. The process of covered call-writing is intended to allow a trader to hold a long position and garner income from the short option position as it becomes less valuable. This process involves buying a future and selling a call of the same stock against the futures position.

      Given that the equity market endured a period of remarkable volatility during and , the usual prerequisite calmness or relative calm has been largely absent for the preferred trading of covered calls at the time of writing. This option was exercisable into stock at expiry in mid-October, presuming the share price remained about By the end of summer, the stock itself had declined to , but the options were worth a mere 19 pence.

      Hardly an ideal result, but if the position had been closed out we would have lost pence on our stock and gained pence on our options, so we would have been marginally out of pocket. The options slumped to 2 pence; but, it is fairly unrealistic to think that we would have closed out the position in such a volatile market and held onto the SSF.

      Almost immediately, the market bounced back from this spike, and indeed GSK stock staged a recovery during October back to pence. Of course, the ravages of time ate away at the premium and it was worth barely 13 pence by October 15th. Presuming drug stocks remained reasonably popular in the wake of germ warfare concerns, the likelihood was that we could hold our stock futures closer to expiry and look for a way to get out with the least possible loss prior to expiry.

      As things stand, the stock future was losing 95 pence, while the option made us pence. Overall, the best time for covered call options-trading is during relatively quiet sideways markets, when hopefully our long futures position will not move particularly, but the option decays neatly as time to expiry nears. In this respect, fund managers can also manage their capital exposures very neatly through SSFs even if they have not already received all the funds they expected to have or wish to modify their portfolio without actually changing all their investments.

      If he wants to reduce some of his bond exposure, he could also sell Government Bond futures against his cash bond holdings. By using SSFs that can be neatly bought and sold in a liquid market environment all day long and settled immediately, the fund manager can always access cash very readily if he needs to pay money back for redemptions, etc. A conversion involves three legs:. Single Stock Futures buy a call; sell a put at the same strike creating a synthetic long position ; sell a future.

      Essentially, the end result is a volatility-neutral and directionally-neutral trade. Conversions and reversals are standard fodder for market-makers who have almost negligible costs of execution. Naturally, the naked writing of options is a dangerous game, especially if the markets turn volatile. Similarly, covered writing as we saw above can leave you exposed if the market turns against your core futures position.

      How can you cover yourself further? Well, one thing you can employ is a covered combination. Essentially, you buy the SSF and sell a covered call against it. Then, to try and receive some more premium and garner some downside protection, you can sell a short put. Generally the call is at or just out of the money i. The put is typically just out of the money. The put is typically selected at a strike below the current stock price. However, the position overall is not too dangerous, although it is much more a strategy for consenting adults as opposed to elementary traders. Alas, not all markets are quite so volatile as the US stock market was during , on which this hypothesis is based!

      As a rough rule of thumb, usually if there is twice as much open interest i. In other words, look to sell the SSF for one or perhaps two days, as the market rebalances itself. Likewise, when the puts are showing twice as much open interest compared with the calls, then buying the SSF is a good idea, as you will likely see a one- or perhaps a two-day bounce. Incidentally, if the market 58 Single Stock Futures moves sharply in your favour over one day, then we tend to prefer taking our money and running. As ought to be clearly evident, the total number of possible uses basically depends on the level of human ingenuity seen in the SSFs marketplace.

      It is not unreasonable to state that SSFs truly add a whole new dimension to equity-trading. Companies can take over other companies or themselves be taken over. When they are taken over their listings tend to lapse, but there many possibilities for the number of shares outstanding if the acquiring company does not simply pay cash for the company it seeks to acquire.

      Meanwhile, even outside the realm of mergers and takeovers, companies have many ways of changing their fundamental share structure. They may choose to amalgamate shares scrip issues or issue more shares to raise cash by means of a rights issue. The important thing to ensure is that when the underlying basis changes, then it will be mirrored in the SSF contract. Wherever possible, we have included a real-world example from the world of SSFs. When stocks change a fundamental aspect of their make-up, as a result of corporate actions, the impact on SSFs and indeed other related derivatives such as options tend to be short lived.

      Note also that exchanges may sometimes opt to change back month futures where there is no open interest. For instance, if as we will see one month of an SSF has an underlying equivalent of 1, shares instead of the more common 1, 60 Single Stock Futures due to a ratio adjustment, then of course we need to pay close attention to making any calendar spread relationship directly proportional in terms of the number of underlying shares rather than the number of contracts.

      Of course, in the event of such sudden announcements, a suspension in an underlying share ahead of such an announcement will also result in a simultaneous freezing in trading of derivatives, whether SSFs or options. The main points to consider with the ratio adjustment concept include: 1 2 3 The physical price of the future will be amended. The size of the contract i.

      Ultimately, the contract size anomaly will be amended and will usually revert to the original size e. Occasionally, exchanges will amend the existing contracts earlier. This is most likely to occur if there is no open interest in a particular back month. Note, however, if there is no open interest in, say, a December back month Corporate Actions 61 contract and the following March contract has open interest, then the exchange is unlikely to amend the earlier contract and keep the later contract at the amended size.

      However, in certain instances, very small quantities of open interest may be amended by negotiation, although this can of course be tricky to achieve for an exchange. This is, of course, the same process as would befall options in similar circumstances. However, traders should always remember that when new contracts are listed i. Incidentally, the Dutch bank ING did precisely the same 2. Again, the ratio model was employed Table 4. Table 4.

      Margin changes in such moves are fairly simple to comprehend too, as they are also relative to the ratio adjustment. The existing BT share options were split into an underlying package of 1, shares for each component company the underlying split was that one share became one share in each component. This applied to pre-existing strikes ahead of the demerger on November 19th, For one thing, BT options in November retained a slight carbuncle with a contract size of 1, lots and a wondrous array of strike prices between pence and pence, thanks to a previous rights issue usually, they would run , , , , , etc.

      Fortunately, it was an even number for the demerger of the stock with a 1 : 1 ratio, so at least LIFFE could still create a settlement position of 1, shares for each underlying component. The new USF contracts were issued from November 14th. Sometimes one has to both admire and indeed feel sorry for the hoops through which derivatives product dervishes must jump in order to maintain an orderly market! Indeed, this guide only scratches the issues in many respects.

      A 4 : 1 ratio was employed. With SSFs the end result was simple—previously, contracts were for 1, shares, now they are for 4, Tables 4. Exercise prices were adjusted as shown in Table 4. Options also became deliverable in 4, lot packages, as opposed to the normal 1, lots.

      However, all new contracts listed after April 29th, are in the more common 1, lot packages, and in the case of options at standard exercise prices. There being no open interest in the March contract on the day before the adjustment, it remained a contract for shares. For 68 Single Stock Futures instance, if the settlement price on March 21st had been Therefore, MEFF would settle the positions at On the next day, before the session starts, the share contracts would be closed at However, as the position has been closed at The ratio approach was once again used and the futures settlement price for Tuesday March 11th was determined by multiplying the futures settlement price on Monday 10th March by the inverse of the adjustment ratio.

      Thus, the reference prices were as follows: Delivery month Futures settlement price Monday 10 March Futures reference price Tuesday 11 March March 8. All delivery months listed on or after Tuesday 11 March reverted to a standard contract size of shares per lot. Although naturally this may yet happen! There was no impact on the pricing of SSFs, although this was one instance where, regardless of open interest, the contract was changed immediately in accordance with the corporate action! So, with Telia paying out SEK 0. The net result is shown in Table 4.

      The same criteria as mentioned above in relation to TIM were employed to make this decision. This is of course very interesting, as again this was an announcement the exchange could make unilaterally without having to wait for existing contracts to expire. Traders with positions in any form of equity derivatives therefore need to make sure they keep abreast of such developments and watch for corporate announcements from the companies whose SSFs they have positions in.

      The exchanges usually post their corporate actions announcements on their websites as soon as they are available, and traders are advised to ensure that they keep a keen eye out for such changes. Note of course that while exchanges can make certain moves unilaterally, they are invariably done after consulting with leading market players to ascertain their feelings on such changes. Traders need to keep paying close attention to all exchange announcements of this sort, lest they are caught out by these announcements.

      In this case, the minimum price movement of some six UK stocks was changed from 0. This early introduction of a series was interesting for two reasons: most notably, this contract was not scheduled to be listed until Friday, June 28th, and bringing its listing forward meant that it was introduced several days before the June contract was listed on Tuesday, April 30th.

      Subject to the completion of the merger, Telia announced plans to change its name to TeliaSonera:.

      Futures Trading - The Complete Guide To Trading Futures

      Soneraexchanged shares then commenced trading on the pre-list of the Helsinki Stock Exchange on Friday, November 15th, As you can see from the above series of movements, mergers can be protracted in their settlement, and thus the possibility for the merger not to happen leaves exchanges open to a potential problem if the merger comes undone. Dealings in the newly merged company started on Monday, December 9th. The lot size remained the same and the settlement price was also unchanged ahead of the new dealings, although the Telia USFs were renamed TeliaSonera in line with the new title of 74 Single Stock Futures the company.

      With the commencement of trading on December 9th in the newly merged company, the USFs on Sonera were delisted. Shareholders received the right to purchase 13 new LGEN ordinary 2. The company also noted that these new shares issued under the rights would not be eligible for the interim dividend, which was due to be paid on October 1st, The ratio approach was used to determine the adjustments. Details of futures settlement prices for LGEN USFs contracts on Thursday, September 26th, and of the resulting futures reference prices in respect of variation margin calculations for Friday, September 27th, are shown in Table 4.

      Once again, traders need to beware of this when spread-trading as naturally being short long on a 1, contract against a long short 1, lot contract leaves the trader open to some rather nasty potential consequences.

      Single Stock Futures. A traders guide Single Stock Futures. A traders guide
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