Single Stock Futures: A Trader's Guide
Book Details
- Author: Patrick L. Young and Charles Sidey
- Categories: Futures & Commodities, Derivatives
Quick Summary
Young and Sidey provide a comprehensive guide to single stock futures (SSFs), covering their mechanics, trading strategies, corporate actions impact, margin and clearing processes, and their relationship to broader index products.
Detailed Summary
"Single Stock Futures: A Trader's Guide" by Patrick L. Young and Charles Sidey, published by Wiley in 2003, is a practitioner-oriented text that arrived at a pivotal moment in derivatives market evolution. The book addresses a product class that represented the "missing piece" in the equity derivatives universe, filling the gap between equity options (which began at CBOE in 1973) and stock index futures (which started at the Kansas City Board of Trade).
The book opens with a historical context, tracing the evolution of equity derivatives from 17th-century Amsterdam, where futures and options on single stocks were actively traded, through the modern regulatory and institutional landscape that led to the reintroduction of SSFs. The foreword, referencing Sir Brian Williamson's work at LIFFE, underscores the strategic importance of SSFs to the survival and reinvention of derivatives exchanges.
The core chapters systematically cover the basics of SSF contracts, including specification, pricing, and the cost-of-carry model. The authors detail practical trading strategies, explaining how SSFs can be used for directional speculation, hedging existing equity positions, and constructing synthetic positions. A dedicated chapter on corporate actions examines how dividends, stock splits, mergers, and other corporate events affect SSF contracts, a critical but often overlooked aspect of single stock derivative trading.
The book also addresses the institutional infrastructure underpinning SSF markets, including margin requirements, clearing house mechanics, and settlement procedures. The chapter on SSFs and indices explores how single stock futures relate to and interact with broader index products, providing insight into cross-market arbitrage opportunities and portfolio hedging applications. The book serves as both an introduction for newcomers and a reference for experienced derivatives traders seeking to understand this specific product class within the broader financial ecosystem.
