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Back to the Stock Futures? Educating the Short Sellers and the Professional Traders

Traders Magazine, April 2005

Mark Longo

Traders are sometimes counterintuitive. At least that's what officials of an exotic product are hoping. We're speaking of the checkered but short history of single stock futures. Three years ago, after the ban on trading these derivative products was lifted in the United States, single stock futures appeared to crash land from investor neglect. Yet today these hybrids have become popular with some traders, who believe they deserve a second chance. Why? They are convinced because volume is climbing. Volume was up by 20 percent last year - from 1.6 million contracts in 2003 to 1.9 million in 2004. And it is a pace some pros expect to continue in the months ahead. However, volume is still only one percent of the market for futures linked to the S&P stock index. That doesn't exactly qualify single stock futures as a hot product.

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