Single Stock Futures (SSFs) are futures contracts on individual shares (stocks). A futures contract is a legally binding agreement that gives you the right to buy or sell an underlying asset at a fixed price on a future date. SSFs are traded on an exchange, in South Africa's case, the JSE. The contracts are standardised which means they have set specifications when it comes to size, expiry dates and tick movement (the minimum upward or downward movement in the price of a security).
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Currency futures are contracts that allow participants to take a view on the movement of the exchange rate as well as hedge against currency risk. Currency futures will be used as a trading, speculating and hedging tool by all interested participants.
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The Alsi Top 40 futures contract remains the flagship contract on the JSE's Equity Derivatives Division, SAFEX (The South African Futures Exchange) with approximately 2.6 million contracts and 400 billion in traded value being traded on average per month. The existing Alsi Top 40 futures contract, trading under the ALSI code, is valued at approximately R250 000.00 per one future and requires a margin of around R18, 000.
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International Derivatives (IDX) provides South African investors with an opportunity to trade and gain exposure to the price movements of internationally listed equities (shares) and internationally recognised indices.
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Options are possibly the most powerful of all derivatives. The purchaser of an option contract losses are limited to the premium paid. They are optional for the buyer but binding for the seller - Options convey the right, but not the obligation, to engage in a future transaction on a futures contract at a guaranteed price. Options are traded by both retail and institutional investors.
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The listing of the MINI Alsi contract came about due to increasing pressure from retail investors to obtain a futures or option on the Alsi Top40 without the large exposure. This listing is in line with international trends that has seen the successful launch of the mini-contracts such as the Mini S&P 500, the Mini Nasdaq 100 and the Mini FTSE 100. With the listing of the MINI Alsi Top40 (ALMI) futures contract, it means that the retail investor can now also get the same exposure but at approximately R30, 000.00 exposure per contract. The contract size is 10th of the size of the current Alsi Top40 future.
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