Single Stock Futures Margin

Discussion in 'Financial Futures' started by qazmax, Aug 12, 2002.

  1. qazmax


    Does anyone know how the margin on these securities will work?

    I know they agreed to 20% of the underlying value of the contract...
    e.g. 5 contracts * stock is 50 * underlying 100 = $5000 margin

    Isn't future margin calculated intraday? How often?

    What happens when you get an intraday call? (send $ or sold out?)

    Does Reg-T apply to SSF?

    Do daytrading rules apply? 4 round turns in 5 days?

    Do they have to be held in a special acount like shorts?

    Any other insight??

  2. gazmax, I don't know how it will work with SSF. With current contracts, the margin is set based on a volitility formula which I assume includes the underlying value. In most cases that margin req remains stable for quite some time, usually months or years without ever being adjusted.
    Your account is marked to market each day at the close. In the old days, if the closing balance fell below the maintenence level, your broker would give you a friendly phone call. Nowadays, IB checks margin every minute and supposedly closes you out if you don't meet maintenence.
    For the average trader, margin calls should never be a concern due to the fact that if you are cutting the initial that close, the maintenence margin call would represent an extrordinary large percentage loss.
    No, PDT will not apply. However, the SEC may still figure out a way to ruin SSF. Hopefully the CFTC can maintain the upper hand.
    There are many books which explain the mechanics of the futures markets and they will answer more of your questions in depth.
  3. Babak


  4. does anybody know if trading volume info will be available for single stock futures ?
  5. qazmax


    I heard they will be showing volume... at least at OneChicago.

  6. qazmax


    Also... I feel confident ISLD Futures will show their size?
    AMEX, NQLX and BOX (when it is born) will surely follow suit.

  7. Brandonf

    Brandonf ET Sponsor

    <i>Does anyone know how the margin on these securities will work?</i>

    They won't for awhile. I know that most of the futures brokers are trying to get everyone rilled up for these, but there is no reason to trade them for a few years. They will not be that liquid, the spreads will be wide, your costs will be higher than in equities. I love the futures markets, but for the time being I see no advantage to SSF's.

  8. well master would be niced if you actually offered some reasoning as to why you believe SSFs won't be that liquid for a few years....

    costs MAY be higher than in equities (@$1/contract with IB, not really)
  9. Brandonf

    Brandonf ET Sponsor

    <i>well master would be nice if you actually offered some reasoning as to why you believe SSFs won't be that liquid for a few years. </i>

    Because they won't be, period. No futures contract in the history of futures contracts has been liquid the first few years it was traded (even the Emini's). The spreads are wide, the liquidity is terrible. SSF's wont be any different. Futures contracts depend upon commercial interest and big funds using them, if they don't there won't be a deep market. The only people whipped up into a frenzy over SSFs are the brokers and the listening to them, and those who are listening are not the ones who provide the real depth to the market.

  10. I personally have no interest in ssf, but a couple of things. First, these could be fantastic hedging vehicles for fund managers. They don't want to sell their stocks, but they want to lock in gains (or stop future losses), especially every quarters end. For pure hedging, futures are far superior to options.

    There are only going to be 50 or so stocks traded. Think of the arb possibilities. If the stock moves, the futures must simoply move also. And to get the futures to move they have to be traded.

    And thirdly, the SEC has driven small traders out of the securities markets, and the futures mkts are waiting with open arms and stocks to trade. The average emini trade size is only 1.7 lots, so small traders can and do make for a liquid market.

    I know very little about ssf, I have to read up on them in babcocks link.
    #10     Aug 15, 2002