Everything you need to know about Single Stock Futures

What types of Single Stock Futures are available? – There are standard Single Stock Futures and Micro Single Stock Futures. The only difference between these two categories lies in the contract size and the code. The codes for standard futures begin with the letter S. The codes for micro futures begin with the letter X. For example, SAAPL and XAAPL represent the standard Apple future and the micro Apple future respectively.

Contract parameters

There are currently more than 50 Single Stock Futures and more than 20 Micro Single Stock Futures available. Among the best-known names are:

• Technology / Mega-Cap growth stocks – Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA, Tesla, SpaceX ...
• Financial services – JPMorgan, Bank of America, Visa, Mastercard ...
• Healthcare – Johnson & Johnson, Eli Lilly, AbbVie, Pfizer, UnitedHealth ...
• Energy & Industry – ExxonMobil, Chevron, Boeing, Caterpillar, Lockheed ...
• Consumer goods – Walmart, Costco, McDonald’s, Starbucks, Home Depot, Coca-Cola ...

Example 1 – You bought a Micro Single Stock Future at a price of $228.00. The price of this future rises to $228.50. Your profit is $5 (= 50 ticks × $0.10).

Example 2 – You bought a standard Single Stock Future at a price of $228.00. The price of this future rises to $228.50. Your profit is $50 (= 50 ticks x $1).

What are Single Stock Futures?

Single Stock Futures (SSF) are standardised, exchange-traded futures contracts in which the underlying asset is a listed share. SSFs are listed on one of the world’s largest exchanges, the Chicago Mercantile Exchange (CME). They can be traded 23 hours a day.

How are Single Stock Futures settled?

Single Stock Futures are settled in cash on the expiry date. This means that no shares are transferred when the contract expires. You simply receive a profit or a loss. You are not obliged to hold the future until the expiry date. Like all futures, they can be bought and sold continuously on a daily basis. The investor only needs to maintain a fraction of the contract’s value as margin in their account.

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What is the difference between stocks and single stock futures?

The main difference is that when you buy a share, you become a shareholder (you may receive dividends, have voting rights and can hold the share in your portfolio for as long as you like). A single stock future is a temporary contract designed to capitalise on the price movements of a share over a period of a few days or months. This can be done using leverage, if desired.

What are the advantages of Single Stock Futures?

Tradable 23 hours a day

Stock exchanges are open for around 6.5 hours a day. Single Stock Futures are traded on the CME for almost 23 hours a day, from Sunday evening to Friday evening. This allows you to react immediately to the publication of company results and global events that occur after the markets have closed. This means you don’t have to wait until the next morning, running the risk of a sharp fall in prices when the markets open.

Less capital required

With futures, you only need to have a fraction of the total value of the future you have purchased in your account. This allows you to use your capital more efficiently.

Short selling is possible

Some shares rise, others fall. With futures, you can open short positions and profit from shares whose price is falling. To open a short position, simply place a sell order.

Simpler than options, warrants and turbos

Single Stock Futures track the price of the underlying share almost exactly in a 1:1 ratio (delta ≈ 1) – so there are no ‘Greeks’, no loss of time value, and no vague volatility premium to take into account.

Simple and straightforward

Single Stock Futures cannot be exercised during their term and are settled in cash upon expiry. You therefore do not run the risk of being exercised and never have to manage a share position.