Trading derivatives and trading stocks


Risk-return profile is symmetric in case of single stock futures whereas in case of stock options payoff is asymmetric. Also, the price of stock futures is affected mainly by the prices of the underlying stock whereas in case of stock options, volatility of the underlying stock affect the price along with the prices of the underlying stock.

What are Stock Futures? How are Stock Futures priced? What are the opportunities offered by Stock Futures? How are Stock Futures settled? Can I square up my position? When am I required to pay initial margin to my broker? Do I have to pay mark-to-market margin? What are the profits and losses in case of a Stock Futures position? In the United States, they were disallowed from any exchange listing in the s because the Commodity Futures Trading Commission and the U. Securities and Exchange Commission were unable to decide which would have the regulatory authority over these products.

After the Commodity Futures Modernization Act of became law, the two agencies eventually agreed on a jurisdiction-sharing plan and SSF's began trading on November 8, Two new exchanges initially offered security futures products, including single-stock futures, although one of these exchanges has since closed. In , the brokerage firm Interactive Brokers made an equity investment in OneChicago and is now a part-owner of the exchange. Single stock futures values are priced by the market in accordance with the standard theoretical pricing model for forward and futures contracts, which is:.

Note the value of r will be slightly different in the two equations. The value of a futures contract is zero at the moment it is established, but changes thereafter until time T, at which point its value equals S T - F t , i.

From Wikipedia, the free encyclopedia. Energy derivative Freight derivative Inflation derivative Property derivative Weather derivative. Retrieved from " https: