Many people are both curious and afraid of single-stock futures. The curiosity lies in the ability to leverage small capital for big gains, while the fear comes from the rapid and fierce potential losses. In fact, single-stock futures are not that mysterious; as long as you understand the operating logic and risk control mechanisms, even beginners can play with them confidently.
What exactly are single-stock futures? First, understand the basics.
Single-stock futures are derivative products based on individual stocks. Essentially, they are an "agreement to buy or sell in the future." You sign a contract today at a certain price, agreeing to settle at that price on a future date.
The most important point: the price of single-stock futures will follow the spot stock price, generally moving in the same direction. If the market is bullish, the futures price will be higher than the spot; if bearish, the futures will be at a discount. The leading or lagging nature of this price movement often serves as a reference for investors' judgments.
In Taiwan, 1 contract of stock futures = 2,000 shares = 2 lots of stock. That is to say, trading one TSMC futures contract is equivalent to buying or selling 2,000 shares.