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Futures Articles
All of our articles have been provided by SFO magazine.
- Don't Be Afraid of Market Competition
- SFO Feature Interview: Futures Industry advocate John Damgard talks about challenges of an ever-evolving U.S. futures industry with plenty of competition.
- CME Answers the Trader's Call with Sector-Related Products
- In the world of market professionals, the S&P 500 index has long been the benchmark for measuring investment management performance and for quickly...
- A Capitalist's Cure for Pollution
- As the principal architect of the futures contracts on Government National Mortgage Association ("Ginnie Mae") certificates and 30-year Treasury bonds at the Chicago Board of Trade (CBOT), where he was chief economist in the 1970s, Dr. Richard Sandor is often referred to as the "founder of financial futures."
- 2005 Co-Persons of the Year
- One look at the CME’s stock price today versus three years ago when the IPO was launched, and you’ll know it’s more than just luck. There’s some leadership going on.
- Exchanges Empower Investors... Sometimes
- The spectacular growth of the futures industry during the past two decades is directly attributable to the world’s futures exchanges’ sensitivity to the needs for risk management and their unique ability to expertly wrap reliable financial safeguards...
- The Beauty of Online Trading
- The Internet and the wham-bam instant gratification it has spawned has transformed the markets. The day is fast approaching when investors and traders will not settle for less than a fully democratized trading scenario. Once the playground for stock day traders only, online trading in U.S. futures still has a way to travel. But, there’s no going back.
- Trading Greenhouse Gas Emissions? Trade for Profit While Still Benefiting Society
- The Chicago Climate Exchange will become a futures exchange later this year; its "airborne" commodity is just as unusual as when financial futures made their debut some 30 years back.
- Trading with the Big boys: Take Advantage of CBOT's New $25 Dow Contract
- Where are the best opportunities to trade? Carter takes a look at a few new and entertaining choices.
U.S. Futures Exchange
Security futures is the term used to collectively describe futures on individual stocks, narrow based indexes and Exchange Traded Funds (ETFs). Security futures trading are now conducted in the U.S. and represent an important new tool for professional traders. Security futures trading enable money managers, proprietary trading operations and other investors to efficiently execute a variety of futures trading strategies for U.S. listed equities.
When a security future is traded, both the buyer and seller put up a good faith deposit called margin. Margin requirements are generally 20% of the cash value of contract, although this requirement may be lower if the investor also holds certain offsetting positions in cash equities, stock options or other security futures in the same securities account.
Single stock futures (SSF) are futures contracts on individual stocks. OneChicago lists futures on more than 200 well-known stocks such as IBM, Qualcomm and Microsoft. In late 2000, the U.S. Congress passed legislation lifting the ban on single stock futures trading, which were already trading in Europe and elsewhere.
A OneChicago single stock futures contract is an agreement for delivery of shares of a specific stock at a designated date in the future, called the expiration date. The size of a OneChicago single stock futures contract is 100 shares of the underlying stock.
Narrow based index futures are futures contracts on narrow based equity indexes (small groups of stocks). OneChicago lists a variety of "boutique" security indexes based on demand from large institutional customers called OneChicago Select Indexes. Each Select Index typically contains three to seven stocks and are cash settled. Select Indexes do not have an LMM assigned to them to make two-sided markets. At certain periods there may not be a bid and/or ask.
ETF futures are futures contracts on Exchange Traded Funds. They have similar characteristics to single stock futures, although the underlying security is the fund itself rather than common stock in a specific company. Thus at expiration, the deliverable assets are shares in the underlying ETF.