Binary Options - Single Stock Futures

In December 2000, after 20 years or more of internecine warfare, the federal government finally passed legislation to allow for the trading of futures. 

Binary Options - Single Stock Futures

It took another 2 years of red tape and regulatory posturing until the exchanges began trading in November 2002. What could have been a slam-bang start in 1999 was a bit anticlimactic in November 2002 since it represented the third down year in a row for the stock market. In fact, this has been the worst 3-year run since the great depression. Nonetheless, single stock futures are finally with us.

These single stock futures offer many possibilities for shrewd traders, but have not, as of this moment, reached the critical mass of volume and liquidity needed to break through to the next level of acceptance and popularity. Success begets success, to more than a small degree. We believe that single stock futures will someday be one of the hottest derivatives on Wall Street. Only time and a bull market will tell.

This means that if you qualify to trade them you will get easy credit and need not put down $100 to buy a $100 stock. 

Making such easy credit available for stock futures traders was a very hotly argued topic by the SEC, and the Federal Reserve, among others. 

At the moment (and margins can always change) the margin is 20 percent, meaning you have to post $20 a share for buying (or selling) a $100 stock. 

The Federal Reserve regulation for buying stock in the normal cash markets of the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotations (NASDAQ) is 50 percent.

If you buy June futures, you should expect delivery the day after the third Friday in June. You can buy and sell June futures to your heart’s content until the last trading day, which is the third Friday of June. 

But if you fail to zero, you must make or take delivery. Most traders do trade out of their June positions shortly before the third Friday and then switch to trading the September contract, with the same idea in mind. Never take delivery, but never stop trading either. In many businesses delivery time is when everyone settles up, but in futures trading most traders are long gone by then. One question on everyone’s mind is, are the futures stock prices comparable to the cash stock prices? The futures price of IBM will match the NYSE cash price for IBM, almost penny for penny.

This article will help you to understand binary options. Your binary options education will continue.

Article Source: http://www.streetarticles.com/day-trading/binary-options-single-stock-futures

code here