2

What is the reason that futures exist on stock indices, but not on individual stocks? My understanding is that individual stocks have options, but not futures. Is there no market for futures on individual stocks?

  • 1
    The question in your first sentence is based on a false premise. There do exist futures on individual stocks. Google "single stock futures". – Chris W. Rea Jan 25 '15 at 17:46
  • Why not make that an answer Chris? "Yes" – JohnFx Jan 25 '15 at 18:42
5

There's a market for single stock futures. The market (however small) is OneChicago, "an Equity Finance Exchange offering security futures products." I don't know how easy access is for retail investors.

2

As others have pointed out, they do in fact exist. But it may be worth pointing out a possible reason that they are not as popular as commodities futures.

If I want exposure to the oil market (for example,) buying oil futures has a big advantage over buying oil. Namely, I don't actually need to store the oil; I can roll over my position rather than taking delivery.

On the other hand, buying single stock futures does not have such a compelling advantage over buying the stock itself, so most people would simply do the latter. (Although stock futures might provide some other advantages in some very specialized situations.)

  • People rarely have a need for 100 UTX (for example) shares at a given time, at a given price in the future. Commodity traders often have a need for 100 gallons (and more!) of oil at a given time, at a given price in the future. – Peter K. Jan 26 '15 at 13:24
  • 1
    @PeterK. That's a good point. I was only thinking about commodity futures from the point of view of a speculator, and didn't even think about the applications to hedging. – Trevor Wilson Jan 26 '15 at 20:17
1

Things very similar to the idea of a "future" that routinely apply to single stocks are "warrants" and "options".

0

There is indeed a market for single stock futures, and they have been trading on the OneChicago exchange since 2002. Futures are available in 12,509 individual stocks, according to the exchange's current product listing. One advantage they offer over trading the underlying stock is the significantly higher leverage that is available, combined with the lack of pattern day trader rules that apply to stocks and similar securities.

Single stock futures have proven to be something of a regulatory challenge as it has been unclear whether their oversight is the remit of the SEC/FINRA or the CFTC/NFA.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.