Single stock futures (SSFs)

What are SSFs?

1. A SSF is a listed JSE Limited listed derivative whose value is determined by the movement of the underlying share.
2. It is a standardised contract of a standard quantity of a specific underlying asset that expires on a predetermined future date and at an agreed price at which it will trade in the future.
3. SSF contracts have standardised terms and conditions as determined by the JSE Limited.

SSF contracts can be hard-working additions to almost any portfolio. They are used mainly by hedgers to reduce risk and by speculators to gain exposure to shares they do not own.

SSFs offer gearing and avoid many of the costs (for example, STT and Strate) of trading in the underlying shares. Long or short trades can be executed cost-effectively and without complications.

 

Why trade SSFs?

SSFs are an exciting and cost-effective alternative to direct share investment with a number of significant benefits, such as:

1. Traders can exploit any market movement up or down - by going long (buying when you believe a specific share price will increase) or short (selling when you believe a specific share price will fall).
2. SSFs help investors save money, since their trading costs are significantly lower
3. SSFs can be used to leverage or gear funds
4. Investors can use SSFs to reduce the risk within their existing share portfolio
5. Investors can engage in pairs trading when the belief is that the one will outperform the other.

SSFs fit the profile of a high risk/high reward investor, who is looking to outperform the broad market. Stop-loss techniques are an integral part of SSF trading and investors are urged to study these before trading as they can assist in limiting losses in volatile market conditions.

 

Read more

Brochure
Download our brochure to learn more about Single stock futures and how to trade them.

 

Courses available

Interactive online tutorials
Our free flash-based course is an interactive tutorial on single stock futures. By going through the material you will learn how the SSF market works, who uses them and which strategies will make you a successful trader on the SSF market.

Face-to-face courses

We offer an intermediate level half-day derivatives course.

Existing clients can log into the platform to check course details, upcoming dates in your city and to make a booking.

New clients please phone our call centre for further information.

 

Start trading

New clients: Click here to register now with Standard Online Share Trading.
Existing account holders: To trade shares, please:

1. Log-on
2. Click on the OTHER PRODUCTS menu
3. Select SSF REGISTRATION.

Currency futures

What are currency futures?

• A currency future is a futures contract to exchange one currency for another at a specified date in the future at a price that is fixed on the purchase date.
• Since investors can close out at any time prior to the contracts delivery date, most contracts are closed out before the contract conclusion.
• This means that currency futures are cash settled in rand and no physical delivery of the underlying currency will take place.

A futures contract is listed on the JSE Limited. Performance by the counterparties is guaranteed via Safcom (the JSE Limiteds clearing house) for all futures contracts that are traded.

 

Why trade currency futures?

The currency market is the largest and most liquid market in the world. Futures trading is an alternate form of investment suitable for experienced traders seeking greater diversification with their current portfolio.
Futures offer the advantage of leveraged investment, where investors could profit in both a rising and falling market; in other words, they are a cost effective way to gear on exchange rates. Long or short trades, i.e. buying or selling a currency, can be executed with ease.
Currency futures also allow individuals to trade outside their two million Rand foreign investment allowance stipulated by the South African Reserve Bank. There are no limits on the value that individuals may transact in the currency futures market.
The old adage high risk for high return is especially appropriate to currency futures trading, since it is more advanced than normal currency trading. It should only be attempted by individuals who are already familiar with the currency market and are comfortable with the concept of gearing.

 

Read more

Brochure
Download the brochure, which explains in detail how Currency futures work and how to get started.

 

Courses available

Face-to-face courses
The futures market is extremely liquid, risky and complex by nature. However, it can be understood if broken down into its component parts and analysing how each functions. Attending a course on the futures market will help you to develop your knowledge and better understand the associated risks of trading this exciting product.
We offer an intermediate level half-day derivatives course.

Existing clients can log into the platform to check course details, upcoming dates in your city and to make a booking.

New clients please phone our call centre for further information.

 

Start trading

New clients: Click here to register now with Standard Online Share Trading.
Existing account holders: To trade shares, please:

1. Log-on
2. Click on the OTHER PRODUCTS menu
3. Select CURRENCY FUTURES REGISTRATION.

Index futures

ALSI and ALMI

ALSI futures are a futures contract based on the Top 40 index usually trading at a slight premium to the underlying asset being the Top 40 index.

Considered the Holy Grail for traders due to the huge liquidity, cheapness of transaction and tight spreads thousands of local and international traders are regularly day trading in the ALSI futures.

It is important to note that while the ALSI futures tracks the underlying Top40 index there is no perfect relationship as ultimately the ALSI futures price is driven by the buyers and sellers and a large order on either side can push the ALSI futures price of out sync with the underlying index.

ALSI futures every index point is worth R10, so a 100 point move in the index would result in a R1,000 profit or loss (depending on the direction of the move).

When one transacts in the ALSI futures you trade at the index price and pay a margin as set per SAFEX plus the OST variation margin (currently R25,500). Your profit or loss will then depend on where you exit the trade based on the R10 per point value.

You can short the index buy selling and buying back at a later stage and make money on the way down.

The ALMI future is basically the mini version of the ALSI futures with every index point worth only R1 and the margin required also being a tenth of the ALSI futures margin R2,550. As there is a market maker this index will track the ALSI futures.

 

Fini15 & Findi30

Here the underlying assets these futures contracts are based on are respectively the Financial 15 index (Fini15) and the Financial and Industrial 30 index (Findi30).

 

DTOP Shareholder Weighted Top 40 index

The DTOP index future, bases pricing off the Shareholder Weighted Top 40 index (DTOP). The construction of this index assumes the same rules as for the TOP 40 index, however offers the following features:

• The DTOP index is created to reflect locally held free float.
• The index is adjusted to eliminate foreign shareholding, thus allowing for a more diversified index.
  

 

General

• The contracts all expire on the third Thursday of every quarter (March, June, September and December).
• Standard Online Share Trading will roll over clients into the next contract on the morning of the close out.
• Margin requirements are subject to change as and when SAFEX changes them.

 

Website

• In order to trade index futures you need a futures account, to open a free futures account on the menu other products futures registration
• You will find these contracts on the menu under find or trade index futures.
• To find the list of shares that make up these indices log onto OST and on the menu key market statistics list of indices and click on the short code for the complete list. You will also find the online charts of these indices here.

 

Easy Trader

• To find these instruments on Easy Trader type the contract month (eg: Sep) and the list will auto drop down.

 

Risk warning

• We must stress that neither Online Share Trading nor the Standard Bank of South Africa are market makers in these index futures products and as such cannot offer pricing to clients in the event that there is insufficient liquidity in the market to exit positions.
• This does add an element of risk to trading this product.

Contract details

	ALSI futures	ALMI futures
Underlying asset	Top 40	Top40
Margin (changes as per SAFEX requirement) *	R25,500	R2,550
Rands per index point	R10	R1
Brokerage	R12.50 per contract + vat	R12.50 per contract + vat
Market maker	No	Initially yes
Shorting possible	Yes	Yes
Market hours	Market hours 8.30am-5.30pm.	Market hours 8.30am-5.30pm. Market maker 8.30am-5.30pm.
Average volume per day	+30,000	+100 but growing

* - Margin is correct at time of writing but is subject to change from SAFEX.

Examples

	Example 1	Example 2	Example 3	Example 4	Example 5	Example 6
Product	ALSI	ALSI	ALSI	ALMI	ALMI	ALMI
Value per index point	R10	R10	R10	R1	R1	R1
Open trade	Long (buy)	Short (sell)	Long (buy)	Long (buy)	Short (sell)	Long (buy)
# contracts	1 (R10/pt)	3 (R30/pt)	1 (R10/pt)	1 (R1/pt)	3 (R3/pt)	1 (R1/pt)
Index value	26,520	24,480	24,110	26,520	24,480	24,110
Margin	R25,500	R76,500	R25,500	R2,550	R7,650	R2,550
Underlying exposure	R265,200	R734,400	R241,100	R26,520	R73,440	R24,110
Cost of transaction	R12.50 +vat	R37.50 +vat	R12.50 +vat	R12.50 +vat	R37.50 +vat	R12.50 +vat
Close trade	Close (sell)	Close (buy)	Close (sell)	Close (sell)	Close (buy)	Close (sell)
Index value	26,650	24,450	24,130	26,650	24,450	24,130
Cost of transaction	R12.50 +vat	R37.50 +vat	R12.50 +vat	R12.50 +vat	R37.50 +vat	R12.50 +vat
Points profit/(loss)	26,650-26,520 = 130 pts	24,480-24,450 = 30 pts	24,110-24,130 = (-20 pts)	26,650-26,520 = 130 pts	24,480-24,450 = 30 pts	24,110-24,130 = (-30 pts)
Rand profit/(loss) ex costs	R1,300	R900	(R200)	R130	R90	(R20)