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Single Stock Futures (SSF)

Information about Single Stock Futures

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What are single stock futures?

SSF or Single Stock Futures trading has fundamentally changed the landscape of derivative trading globally. Single Stock Futures trading allows investors to hedge their portfolio and exploit market opportunities to achieve maximum returns on their investment easily and with minimum capital.

You can buy SSFs on the South African Futures Exchange (SAFEX) which is a subsidiary of the JSE. Single Stock Futures are derivatives which enable experienced investors to either hedge long long term investments por the underlying assets are usually listed shares. When you buy an SSF contract it will equal the same value as 100 of the underlying shares, after taking dividends and interest into account.

Most importantly, you do not have to pay the full price of the 100 underlying shares. The only requirement is that you pay enough money into your SSF trading account to cover the initial margin. The initial margin is a fixed Rand amount per contract as determined by SAFEX. Therefore you would only need R15,000 to purchase SSF contracts up to a value of R100,000. If your investment rises to R115,000 - equalling a 15% rise in the value of the position - you will in fact make a 100% return on your investment, as your initial investement was only R15,000 initially. This is the effect of gearing.

Another important feature of SSF trading is that you can open a "long" position or a "short" position. A "long" position involves purchasing the SSF contracts and selling them again at a later stage, hopefully after the price has risen. Therefore "long" positions make money in a rising market. A "short" position is the reverse - selling SSF contracts first and buying them back later. Behind the scenes, your market maker will borrow the shares on your behalf, allowing you to sell them even though you do not actually own them. If you manage to buy the SSF contracts back at a lower price, you will make money. Therefore "short" positions make money in a falling market.

SSFs are very powerful trading instruments that will benefit active traders who look to optimise their cash flow. However, SSF trading involves the risk of loss which can exceed your initial investment. Single Stock Futures may not be suitable for all investors and will depend largely on your appetite for risk and your overall investment strategy.

Many SSF traders have found attractive opportunities in margin trading, especially in falling markets. However, SSF trading involves the risk of loss which can exceed your initial investment. Single Stock Futures may not be suitable for all investors and will depend largely on your appetite for risk and your overall investment strategy

How can I trade in single stock futures?

If you are interested in trading single stock futures you should complete the simple online registration process.

STEP ONE: Register online for a SSF account and PSG Online web profile.
STEP TWO: If you are new to PSG Online, we require your FICA details. PSG Online will open your SSF account within 72 hours of receipt of your FICA documents.
STEP THREE: Login to your account. You will use the same username and password chosen when you registered for your web profile in Step One.
STEP FOUR: Select the appropriate SSF account and place an order through the New Order screen.

What are the advantages of SSF trading?

SSF trading is done in real time on the PSG Online Single Stock Futures trading platform. You can place your Single Stock Futures orders, receive order confirmations and view a live holdings and cash available screen as your trades are matched in the market through the PSG Online platform.

Single Stock Futures are capital efficient investments that allow you to diversify or hedge your portfolio, because SSFs require only a margin deposit to open a position rather than the full cost of the underlying shares. If you own a normal share position, you can sell that position and buy it back as a SSF. You will need to leave the initial margin in your single stock futures trading account, but the difference between the initial margin and the entire value of the position will be cash available for you to withdraw from the account.At the same time, SSFs are cost-effective hedging vehicles that allow you to fully exploit market movement whilst benefiting from corporate actions. In other words you will receive the benefits of dividends and other corporate actions, where these are relevant. Short positions allow you to make money even in a falling market.

Our SSF trading system can take your instructions after hours and execute them once the market opens - or store stop orders that will monitor the market and execute at your chosen price once the market has reached the exact level you specified.

An SSF trading account is "marked to market" every day. This means that your profits and losses are paid into or taken from your cash account on a daily basis. If you have opened a long position and the underlying asset price keeps rising, you will receive that cash to trade with or even withdraw daily. If, however, the market moves against you and losses are taken from the SSF trading account, you have to deposit more cash to ensure that you never leave a negative balance on the account. The initial margin for Single Stock Futures is always kept separate from your cash account - you cannot use the initial margin to offset losses while the position is open. Once the position has been closed, the initial margin will be deposited into your account.

Risks of trading Single Stock Futures

The single most significant risk of trading Single Stock Futures is the fact that you can lose more that the money you started your trade with. The risk of loss in trading futures contracts or commodity options can be substantial; investors should understand the risks involved in taking leveraged positions.

If you are "long" (you have bought the investment in the hope that that the price will rise) on a Single Stock Future position and the stock drops dramatically in a day you could lose enough in one day to warrant a margin call. If you do not have enough money to fulfil the margin call, your position would be closed and you would owe money to your broker.

Single Stock Future trading is clearly not appropriate for all investors. Successful Single Stock Future traders require a high appetite for risk, time to watch the markets and an expert knowledge of the markets and trading process. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

What are the Single Stock Futures trading costs?

Brokerage is charged at 0.4% (excl VAT) of the value of the transaction. ALSI index futures are charged at R25 (incl VAT) per contract traded. The mini ALSI (ALMI) is charged at R5 (incl VAT) per contract traded.

A booking fee of R60 per SSF is charged when a new position is opened per day - therefore you pay only for the opening leg of all transactions, and only once per day per SSF. Therefore you can buy into the Sasol SSF 10 times on one day and you will only pay the R60 once. There is no booking fee on index contracts.

Interest payable on the SSF cost value would be determined daily by the market maker in relation to the ruling SAFEX rates.

Interest will be paid on cash balances in your Single Stock Futures trading account at a rate linked to the JSE Trustees rate.

Need Single Stock Futures explained in more detail? Contact a PSG Konsult financial advisor or register to start SSF trading.

What Single Stock Features are available?

PSG Online offers direct market access to the JSE and with live prices. The latest list of shares available for SSFs can be found on our website.

We also offer single stock futures trading in certain instruments available for trading through the JSE's central orderbook. These would include index futures, like the ALSI based on the Top 40 shares weighted by market capitalisation, and international SSFs, also called IDX futures. This list is updated frequently and also available on our website available once logged in.

Get access to a wide range of SSFs, register for a trading account.