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Security Futures Pricing |
Single stock futures prices generally conform to a theoretical pricing model based on the following formula: Futures price = stock price x (1 + annualized interest rate - dividend) Futures will typically trade at a premium to the stock price because of an adjustment for interest rates. The premium reflects the interest earned on the capital saved by not posting the full value of the underlying stock. Since futures holders are not entitled to collect dividends, the futures price must be adjusted downward by the present value of the dividend payments expected prior to expiration. When a large dividend payment is forthcoming or if the underlying stock is difficult to borrow, the futures price may trade at a discount to the actual cash price.
Click below for more information on how to setup a Security Futures Account
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Copyright ©2000 CMB Trade Group All rights reserved |
CMB Trade
Group Is an online commodity trading and online futures trading broker providing
$3.00 commodity futures trading. As an online commodity futures trading
broker we provide the technology to accommodate the new trader in today's markets.
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CMB Trade Group is a National Futures Association member, and is
registered with the Commodity Futures Trading Commission
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