How are prices of SSFs determined?
The price of an SSF contract is equal to the cost of buying the shares and holding them until the expiration of the futures contract. That is: Current Share Price + Interest Costs – Dividends Received = Current Futures Price What are some possible uses of SSFs? SSFs can be used in a variety of ways and for a variety of purposes. Some general uses include: Hedging — Using SSFs to protect against adverse price movement in the underlying stock. Speculating — Using SSFs to take an outright position on your opinion of future price movement. Portfolio or Index Balancing — Using SSFs to effectively enter or exit positions when component stocks are added to or deleted from a stock index. Refer to our section on Trading Strategies for detailed information. What is leverage and why is it important? Leverage refers to the amount of capital or “margin” one must put up relative to the value of the underlying contract. The smaller the percentage, the more highly leveraged a contract is said to be
