Does anyone trade single stock futures

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But note that leverage is not the preserve of the stock futures market. Of course, traders need to be a lot more careful with stock futures. And there also needs to be a curb on the number of stocks on which futures are permitted, as they are meant only for very liquid stocks.

According to a report in The Economic Times, Sebi is considering measures such as circuit filters and physical settlement for derivatives based on single stocks. The new leadership at Sebi would do well to nip such proposals in the bud.

Circuit filters would put an unhealthy restraint on prices from reflecting true changes in fundamentals. If the issue is an acute shortage of liquidity and hence a sharp drop in prices, this will result in the marketwide circuit breaker being triggered. One way of solving this would be to conduct a call auction to determine the opening price. A call auction is a process where limit orders are collected for a fixed period, and the price that enables the largest number of orders to be executed is chosen.

But in abnormal cases, when major selling is expected, buy orders would be hard to come by in the early part of the trade. A call auction is a good way to establish a consensus opening price for securities.

Never miss a story! 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. Select Language Hindi Marathi Gujarati. Get Quote. It is available through RSS feed reader or through some browsers. It will show you what's new since the last time you checked the feed, without having to visit the website.

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