• SSF

Single Stock Futures (SSF)

WHAT IS A SINGLE STOCK FUTURE (SSF)?

  • A Single Stock Future (SSF) is a legally binding contract that gives investors the ability to buy or sell a specified number of shares at a fixed price agreed now, on a specified date.
  • A SSF allows an individual to profit from the rise (or fall) in the share price without having to own the underlying shares.
  • SSFs provide a great alternative for investing in listed shares as they avoid many of the costs associated with trading actual shares.
  • The relationship between SSFs and the underlying share enables the use of SSFs to hedge existing share portfolios therefore protecting an individuals’ portfolio from adverse price movements.

BENEFITS OF TRADING SSFs

  • It is cheaper to trade compared to trading underlying shares especially as most regulatory fees do not apply to SSFs.
  • You can make short-term profits by readily exploiting an increase or decrease in the market. This is done by taking advantage of price movements, whether the prices are falling or rising. Unlike share trading, SSF trading enables investors to short (sell) the underlying share without owning the share, therefore enabling an investor to exploit the market if prices are decreasing and not only increasing.
  • Reduce risk within an existing share portfolio: Hedging is the elimination of market risk, where market risk is the risk associated to fluctuations in the price of the underlying share. SSF enables investors to hedge against adverse price movements. The ability to short (sell) the holder can protect the value of an existing share portfolio, without actually having to sell any of the shares.
  • Gearing: SSFs give investors exposure to share prices without having to buy or sell the actual shares (unless the contract is held to expiry). Gearing enables the investor to only place a small percentage of funds in SSF (initial margin). Investors are asked to put up extra margin (on top of the approximate 10% SAFEX requirement) as a buffer against variation margin calls.
  • Liquidity: Liquidity refers to ability to readily close a position and extract cash value. SSF contracts are only written on liquid blue chip stocks and are thus easily tradable.
  • Variety of Trading Strategies: SSF contracts enable “new” trading strategies at a more cost efficient level, one of which is “pair trading”. This involves buying one share and selling another simultaneously. The aim is to take a position on the relative performance of two correlated shares (usually from the same sector or have common price drivers). If the outlook on one share is more favourable than the other, one could buy the former and sell the later. This decision is generally based on quantitative analysis (e.g. MTN versus Vodacom).

RISKS INVOLVED WITH TRADING SSFs 

It’s important to highlight that the risk of loss from trading in SSFs can be substantial.

  • The main risk associated with SSFs, is the effect of gearing.

Gearing refers to the ratio between the portfolio value (initial margin and free cash) at any point in time relative to the exposure to the underlying instrument.


Because of gearing, profit and losses on a position can be more than the initial margin posted. If a margin call cannot be met, the broker may close the position. With this being said, it is important that investors understand that gearing works in both directions and Intrepid Capital is here to advise you accordingly so you can make informed decisions and mitigate your risk as much as possible.

  • Another risk of SSF is the impact of corporate actions. Corporate actions are any actions by a company (i.e. BHP Billiton) as an issuer of an underlying instrument (ordinary shares), which affect the holder of the shares. Corporate actions may have an impact on price and quantity of a SSF position.        


By Trading SSFs Through Intrepid Capital, We Can Offer You:

  • Real time online trading
  • Real time profit and loss statements / reports
  • Competitive brokerage fees
  • Ability to enter, cancel and amend orders online
  • Live streaming prices
  • Intraday graphs on Indices and Shares
  • Live portfolio values and exposure

For more information regarding Single Stock Futures, please download our Brochure “Single Stock Futures”. Where you will find examples.  

For more information on how Intrepid Capital can help you with SSF trading, please email info@intrepidcapital.co.za or call us on     011 234 6570 to have a conversation with one of our team.