Are Single Stock Futures better than trading equity options?
Single-stock futures are more straightforward than equity options, where you have to decide which strike price to trade within each contract month, a decision that may involve an analysis of time premium. With futures, it’s an easy decision: Do you believe the price of the underlying stock is going to higher or lower than the current price indicated by a certain futures contract when that contract expires? Buy futures if you think the price will be higher. Sell futures if you think the price will be lower. It’s that simple! How big are Single Stock Futures contracts? Each futures contract represents 100 shares of underlying stock. That is the contract size used at LIFFE and by the Chicago Board Options Exchange (CBOE) for equity options. What are the margin requirements for Single Stock Futures? The initial margin requirements for Single Stock Futures will be 20% of the contract value. If so, margin would be $2,000 for one contract that represents 100 shares of a $100 stock (contract v
