Single Stock futures (SSFs) mark a significant shift for individual traders who want the precision of a single stock with the structural power of a futures contract.

This case study focuses on relative value (RV) trading and shorting efficiencies when trading SSF against an index. For the sophisticated individual trader, this represents the transition from speculating on direction to "trading a relationship" and maximizing return.

By using SSFs alongside the Micro E-mini S&P 500 (MES) or Nasdaq-100 (MNQ) for example, traders can isolate a company’s performance from the noise of the broader market in either direction.

Individual traders often find themselves in a frustrating position: They pick the right stock, but the market (the index) starts a correction, dragging their winning pick down with it. With SSFs, you can isolate the performance of a single company, mitigating some of the overall market risk. 

Suppose a trader has a bullish view on AAPL due to a new product cycle, but believes the overall technology sector, after a prolonged rally, is overbought and due for a correction. 

• The problem: A trader that simply buys AAPL shares is exposed to the possibility of a broad market sell-off that, theoretically, could drag down the share price of AAPL, even in an environment in which Apple’s performance was strong. If the Nasdaq-100 were to experience a 5% correction, the share price of AAPL may outperform the market and still decline by, say, 3%. Even though the trader’s view that APPL would outperform the broader market was correct, they would still be exposed to a 3% decline in P&L if they simply bought AAPL shares. 

• The SSF solution: The trader could buy SAAPL (Apple futures) and Short MNQ (Micro Nasdaq-100) in equivalent dollar amounts.

Assume the following prices:

MNQ: 29,600

SAPPL: 280

Notional Value:

MNQ = 29,600*2 = $59,200

SAAPL = 280*100 = $28,000

Therefore, a ratio of 2 SAAPL to 1 MNQ achieves similar, but not precise, notional values for the two instruments. 

Hypothetically, if a trader:

Sold 1 MNQ @ 29,600 and 

Bought 1 SAAPL for 280 

And MNQ fell by 5% to 28,100, while SAAPL fell by 3% to 271.6

The P&L (minus fees and commissions) would be 

MNQ = 1,480 point = + $2,960

SAAPL = -8.4 * 2 = - 16.8 points = -$1,680

Overall P&L = +$1,280

This is "alpha" – the value added by the stock over the index.

• Traders can use Single Stock futures to assume a long position in one company versus a short position in another. For example, they might use SXOM0 to get long Exxon and SNVDA to get short NVDIA if they believed geopolitical considerations were more favorable for an energy-related company than technology company in the near term. 

• In a reversal of the MNQ versus AAPL example we went over above, a trader might have a view that the broader market might outperform a specific company, for example, Tesla, due to a belief that tariff policies could have an outsized impact on that company. They could short the STSLA futures contract and buy the MNQ or MES futures contract in a ratio that would result in similar notional values, as described above. 

• CME Group also lists futures on specific sectors of the economy like financial, technology, energy, etc. These futures can be used along with SSF to assume a position in a single name equity against the sector in which it is included. For example, one could use the JP Morgan Single Stock futures contract (SJPM0) and the E-mini Financial Select Sector futures contract is XAF, to gain exposure to the share price of JP Morgan versus that of the broader financial sector. 

With SSF, E-mini and Micro E-mini indices at CME Group, you can perfectly weigh your trade.

If your Apple SSF position is worth $60,000, you can hedge it precisely with the equivalent notional value of Micro Nasdaq contracts and vice versa (in this case ~ 2 AAPL:1 Micro Nasdaq).

Since both the SSF and Index futures trade 23/5, you can adjust your alpha trade at 2:00 a.m. if news breaks. You don't have to wait for the 9:30 a.m. ET New York bell to manage your relative exposure.

As we’ve discussed, the performance bond requirements of Single Stock futures are substantially less than similar positions in stocks or ETFs, allowing traders efficient allocation of capital among investments and trading portfolios.

Shorting stocks and ETFs requires that the trader or broker locate the stock before shorting it and involves borrow costs associated with the lending of that instrument. Shorting a futures contract simply involves selling it to go short and buying it to go long; there are no locate requirements nor borrow costs. 

Trading derivatives—including futures, options, swaps, and cleared OTC products—involves significant risk and is not suitable for all investors; as leveraged instruments, losses can exceed your initial deposit. Swaps trading is strictly limited to Eligible Contract Participants (ECPs) or those authorized under local law.

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