Single-stock futures offer an investor tremendous versatility and efficiency compared to traditional equities. Primarily, they are used as leverage instruments to increase a participant’s exposure to a share in the underlying market. To this end they can also be utilised to free up capital in an existing equity holding by converting it to a futures position.

Leveraging is significant; an investor will typically receive exposure of ten times the initial margin requirement (capital outlay) for the future. Trading costs are also lower than the corresponding equity trade and bearish strategies such as short selling are easier to implement. Other benefits of SSF’s are:

• Useful to hedge exposure
• Preferential funding rates
• Full pricing transparency