Single Stock Futures
Standardized contracts to buy or sell shares of one company at a set price on a future date.
What is Single Stock Futures?
Single stock futures (SSFs) are standardized exchange-traded contracts obligating the buyer to purchase, and the seller to deliver, a fixed number of shares of a specific company at a predetermined price on a specified future date. Unlike stock options, SSFs obligate both parties to complete the transaction unless the position is offset before expiration. They are used by investors to hedge existing stock positions, speculate on price movements with leverage, or gain economic exposure to a stock without borrowing shares for short selling. Single stock futures were legalized in the United States under the Commodity Futures Modernization Act of 2000 and began trading on the OneChicago Exchange in 2002. The U.S. SSF market remained relatively illiquid compared to equity options, and OneChicago closed in 2020; SSFs remain active in several international markets including India, South Africa, and the UK.
Example
An institutional investor holding 100,000 shares of Apple stock hedges against near-term earnings risk by selling 1,000 Apple single stock futures contracts (each representing 100 shares) at the current futures price. If Apple's stock falls after earnings, gains on the short futures position offset losses on the stock holding.
Source: CFTC — Single Stock Futures