Narrow
Based Indices
Narrow-based indices are futures contracts on small
groups of stocks that allow an investor to take a position
in a concentrated area of the equities market. Each
narrow-based index will typically include three to nine
companies in a specific industry sector.
A narrow-based index futures contract is an agreement
to deliver shares of the underlying stocks at a designated
date in the future, called the expiration date. At all
times, four expiration dates will be available for trading
narrow-based indices. narrow-based indices are physically
settled at expiration.
Using these indices, investors can take a long or short
position in a concentrated basket of stocks without
incurring multiple transaction fees.
Current industry sectors for Narrow Based Indices include
airlines, biotech, computers, defense, investment banking,
oil services, retail, and semiconductor components.
Additional sectors may be added in the future.
Margin requirements are generally 20% of the cash value
of contract, although this requirement may be lower
if the investor also holds certain offsetting positions
in cash equities, stock options, or other security futures
in the same securities account.
No uptick is required to establish a short position
in OneChicago's products. Short sellers may also benefit
from eliminating the costs and inefficiencies associated
with the stock loan process.
A list of OneChicago's planned narrow-based indices
are listed available here.
For additional information, please visit our Single
Stock Futures Resource Center. You may
also want to check out Single
Stock Futures FAQ, or preview our FREE
Online Single Stock Futures Seminar.
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