jake bernstein - how to trade the new single stock futures

[...]... other questions and issues about the use and understanding of SSFs: • • • • • Do investors understand the SSF market? Do stock investors and traders know how to trade futures? Do futures traders understand how to trade stocks? Are stock traders prepared for the volatility of futures? Are futures traders prepared for the fundamentals that often affect stocks? • Are stock traders sufficiently educated and... both the futures and the securities industries was a new vehicle, a new instrument, a new game that traders and investors could play The time was optimal for the introduction of SSFs ❚ How Futures Survived While Stocks Crashed Another positive aspect of the new SSF market was the relative stability of the futures markets, even though stocks declined sharply 8 How to Trade the New Single Stock Futures. .. world of vast new possibilities to stock and futures traders Some market experts feared that the ability to trade futures on stocks would reduce investors’ incentive to own stocks Others, however, correctly reasoned that ultimately the increase in market participants would add liquidity, volume, and numerous new strategies to the markets, thereby enhancing the risk-transfer process and with it the overall... low in the 40.5 area in January of 1932 Stocks then languished during the Great Depression By the early 1950s, stocks began a trend up as the United States lifted itself out of depression, and investors regained confidence in the economy Stocks continued to rally until the early 1970s, making a low in 1972 from which a lengthy rally developed until the July 1 2 How to Trade the New Single Stock Futures. .. bond futures The commodity market, as it was known for many years, was now the futures market.” As a sign of the times, the then leading trade publication, Stocks & Commodities Magazine, changed its name to Futures, reflecting a new era of trading in these markets In spite of the changes and additions to the markets, futures traders were still futures traders and not futures “investors.” No matter how. .. technical indicators are more responsive to quick changes in market trends ❚ Enter Stock Index Futures The introduction in 1982 of stock index futures in the Standard and Poor’s 500 index and the Value Line index was a major step toward the union of stocks and futures Stock traders, who once considered futures trading risky at best or a gamble at worst, realized the benefits of using stock index futures as... majority of individuals As stock investing matured, numerous products and vehicles were offered to the public and professional traders as means to various ends Today’s investor can choose between stocks, bonds, stock options, LEAPS (long-term stock options), single stock futures (SSFs), mutual funds, bonds, and numerous variations and combinations of these On the other hand, futures trading has had a... compensation for the wrongs that had been committed But, of course, investors didn’t get their money back; instead, it went to the 6 How to Trade the New Single Stock Futures government By late 2002, SEC investigations were rampant as investors and the government sought victims to be held accountable for losses so many investors suffered Even the once highly respected Martha Stewart was implicated in a stock scandal... matter how the exchanges attempted to change the image of the futures business, the futures trader was forever destined to be a trader and not an investor Even if an individual bought silver futures at $4 an ounce and held them 12 months, exiting at $6 per ounce, he or she was still a trader and not an investor The reasoning was that an investor was more conservative than a futures trader The investor who... investors and traders who had previously been unwilling to use the futures markets or were unfamiliar with them now had a new and legitimate vehicle by which to either hedge their stock transactions or speculate on stocks with less up-front capital Futures traders, who have long felt that stocks require too much margin or are not sufficiently volatile, now had a new trading vehicle 1 / The Biggest Bull . of vast new possibilities to stock and futures traders. Some market experts feared that the ability to trade futures on stocks would reduce investors’ incentive to own stocks. Others, however,. understand how to trade stocks? • Are stock traders prepared for the volatility of futures? • Are futures traders prepared for the fundamentals that often affect stocks? • Are stock traders sufficiently. Stock Index Futures The introduction in 1982 of stock index futures in the Standard and Poor’s 500 index and the Value Line index was a major step to- ward the union of stocks and futures. Stock