Single Stock Futures are simply the forward value of a stock which is computed by adding an annualized interest rate component to the price of the stock and subtracting any dividends to be paid prior to expiration. The interest component is the key as it is a competive rate used by professionals. Any trader should be ambivalent about purchasing an asset today or purchasing the same asset for delivery in the future as long as the cost of carrying the present value is the same or lower than the future value. If the present and future value are not trading at the proper basis then there is a risk free arbitrage to be had. Accordingly the stock and it's associated future will always trade in lockstep with each other and at expiration the future contract will expire into a long stock postion if it is not closed out prior to expiry. So if the stock and the Single Stock Future are the economic equivalent traders should be ambivalent about which one they purchase. Right? Not necessarily. For traders who use margin accounts to finance their trading the Single Stock Future may be a much better deal. If you think about it there is a interest rate charged on the margin loan which is higher than the competitive rate built into the Single Stock Future price so by buying the future instead you are paying an effective lower rate. Same economic trade but at a net lower price. For short sellers the same math holds true. When selling short the trader sometimes gets a 'rebate' on the invested returns of the proceeds that is below the interest rate built into the future. Traders who sell the future instead of going short the stock get to keep 100% of the interest component that is built in instead of a rebated percentage. Same trades but on much better financial terms. OneChicago has constructed a comparison calculator that allows traders to input variables such as the stock, expiration, quantity, Long and Short rates charged by their brokerage, deposit rate and performance bond (t-bill) rates they have access to. These inputs are in fact the costs and income streams from trading. The calculator uses these costs and incomes and uses a weighted average to derive a net interest rate for both the stock transaction and the equivalent Single Stock Future trade. It's very simple. If the interest rate is lower using the Single Stock Future the trader would be better off buying the future. Conversely if the interest rate is higher on the Single Stock Future then it would be the better instrument to sell. Same economic exposure to the market but at a lower cost. That is how traders increase their profits. Visit us at www.onechicago.com and click the banner on the front page. We think you will find it informative.