Future and option shares list
Equity index futures and index options tend to be in liquid markets for close to delivery contracts. OTC products are usually for longer maturities, and are usually a form of options product. For example, the right but not the obligation to cash delivery based on the difference between the designated strike price, and the value of the designated index at the expiration date. These are traded in the wholesale market, but are often used as the basis of guaranteed equity products, which offer retail buyers a participation if the equity index rises over time, but which provides guaranteed return of capital if the index falls.
Sometimes these products can take the form of exotic options for example Asian options or Quanto options. Forward prices of equity indices are calculated by computing the cost of carry of holding a long position in the constituent parts of the index.
This will typically be the risk-free interest rate , since the cost of investing in the equity market is the loss of interest minus the estimated dividend yield on the index, since an equity investor receives the sum of the dividends on the component stocks.
Since these dividends are paid at different times, and are difficult to predict, estimation of the forward price can be difficult, particularly if there are not many stocks in the chosen index. Indices for OTC products are broadly similar, but offer more flexibility. From Wikipedia, the free encyclopedia. This article has multiple issues.
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April Learn how and when to remove this template message. This article provides insufficient context for those unfamiliar with the subject. Please help improve the article with a good introductory style. December Learn how and when to remove this template message. They are traded in various financial markets, including those of the United States, United Kingdom, Spain, India and others.
South Africa currently hosts the largest single-stock futures market in the world, trading on average , contracts daily. In the United States, they were disallowed from any exchange listing in the s because the Commodity Futures Trading Commission and the U.
Securities and Exchange Commission were unable to decide which would have the regulatory authority over these products. After the Commodity Futures Modernization Act of became law, the two agencies eventually agreed on a jurisdiction-sharing plan and SSF's began trading on November 8, Two new exchanges initially offered security futures products, including single-stock futures, although one of these exchanges has since closed.
In , the brokerage firm Interactive Brokers made an equity investment in OneChicago and is now a part-owner of the exchange. Single stock futures values are priced by the market in accordance with the standard theoretical pricing model for forward and futures contracts, which is:. Note the value of r will be slightly different in the two equations.
The value of a futures contract is zero at the moment it is established, but changes thereafter until time T, at which point its value equals S T - F t , i. From Wikipedia, the free encyclopedia.