Single stock futures - Interactive Brokers

Welcome to OneChicagoComparingSingle Stock Futures and OptionsSpring 2009Copyright ©2009 OneChicago, LLC. All rights reserved.

OneChicago OverviewInnovativeProductsFullyElectronicStructuredforLiquidityOpen andTransparentMarkets• Over 1200 Single StockFutures• 48 ETF Futures:DIAMONDS ® IWM ® ,QQQQ ®,FXI,EEM,MDY,EWZ, SPY,XLE, XLF, XLU, XLV,GLD• 1 SSF contract = 100shares of underlyingstockTwo Types ETFContracts sizes• State of the arttechnology using theCBOEdirect® matchengine• Access to OneChicagofrom CBOEdirect orGLOBEX ®• CBOEdirect supportsFIX and CMi APIs• Lead MarketMaker System*• Continuous twosidedmarketsand fast fills• WYSIWYG “Whatyou see is whatyou get” quotesand execution• Bid/Offertransparency andmarket depth• Anonymity• In US, Trade fromsecurities orfutures accounts• Options ClearingCorp. (OCC)(AAA) CreditRating clearing• 1) one contract = 1000shares,• 2) one contract=100shares (mini)*For products listed on www.OneChicago.com with an *, no LMM will be responsible formaking continuous two-side markets.

Single Stock Futures• Security futures is the term used tocollectively describe futures on individualstocks, narrow-based indexes andExchange Traded Funds (ETFs).• Single stock futures (SSFs) are anagreement to purchase or sell anunderlying security at a designated date inthe future (the expiration date).

The Profile of Single Stock Futures• The price movement of the SSF is tightlycoupled to its underlying Stock.• Unlike Stock, there are no ownership, dividendor voting rights contained in a SSF.• Contracts are cleared through the AAA ratedOCC (Option Clearing Corporation) or the CMEClearing House.• OneChicago’s SSF contracts expire into aCUSIP position at expiration. There is no earlyexercise.• SSFs can be held in either a securities orcommodity account.

Single Stock Futures (SSFs) are an agreement to purchase orsell an underlying security at a designated date in the future(the expiry date).• Futures Price = Stock Price plus Interest minusDividends• Futures price = stock price x [1+(interest rate/360) xdays to expiration)] – dividend (if any to expiry)SSFs where Your Interest comes First!*Simple pricing formula

Profit and Loss diagram for a long stock position of 100shares.

The Power and Risk of Leverage• Capital-efficient instruments with performance bondrequirement of 20% (5:1 leverage)‣ at $80/share, trade equivalent of 100 shares of IBMwith $1,600 performance bond‣ at $25/share, trade equivalent of 100 shares of MSFTwith $500 performance bond‣ same performance bond requirement long or short• Access to open trade equity: Access to excess cash if yourposition moves favorably; contribute additional cash if theposition moves unfavorably.• Leverage provides capital efficiency. It also increasespotential risk, which may not be suitable for allinvestors. You should consult your financial advisor beforeusing security futures to engage in leveraged transactionssuch as those described in this presentation

Comparing the DifferenceFunding RequirementsSingle Stock FutureDeep in the Money Call Option(DITMC)25% 100%$75 SSF @ 25%= $18750.0075$ stockDeep in the money callStrike $55= $20.00Funding requirement on$20 Call = $20,000.00

Comparing the Difference continuedTheoretical ValuesSingle Stock Futures• Stock Price• Interest• DividendsDeep In the Money Call• Stock Price• Interest• Dividends• Strike price• VolatilitySSFs are a one-Delta just as stock is a one-Delta.SSFs price mirrors that of its underlying stock.SSFs have no strike price, where any call option has a strike.

For more information click the link below:www.OneChicago.comSecurity futures trading involves the risk of loss, including thepossibility of loss greater than your initial investment.Security futures may not be suitable for all investors. Consultyour broker or financial advisor before trading.All investors will be required to review risk disclosurematerials and meet suitability requirements established bytheir brokers.You should carefully review all disclosure statements andensure you understand the risks of trading security futures.

©2009 OneChicago LLC. All rights reservedThe information in this presentation has been compiled by OneChicago, LLC (OneChicago) for general information purposes only.Although every attempt has been made to ensure the accuracy of the information, OneChicago assumes no responsibility for anyerrors or omissions. Examples herein are hypothetical situations used for explanation purposes only and should not be consideredinvestment advice. All matters pertaining to rules and specification herein are made subject to and are superceded by the officialOneChicago rules.The Exchange for Single Stock Futures sm is a service mark of OneChicago. CME Group is registered trademark of CME Group,Inc.®. CBOE® and The Chicago Board Options Exchange® are registered trademarks of The Chicago Board Options Exchange,Incorporated. Other names, logos, designs, titles, words or phrases may constitute trademarks, service marks or trade names ofOneChicago or other entities and which may be registered in certain jurisdictions“Dow Jones, “The Dow, “Dow Jones Industrial Average”, “Dow Jones Industrials”, “DJIA” and “DIAMONDS” are service marks of DowJones & Company, Inc. and have been licensed for use for certain purposes by OneChicago. OneChicago’s DIAMONDS futures arenot sponsored, endorsed, sold or promoted by Dow Jones, and Dow Jones makes no representation regarding the advisability ofinvesting in such products.PowerShares QQQ® is not sponsored, endorsed, sold or promoted by either PowerShares Capital Management LLC, The NasdaqStock Market Inc. or the PowerShares QQQ Trust, Series 1 (together “ETF Related Parties”). ETF Related Parties make norepresentation or warranty, express or implied, to the owners of the PowerShares QQQ® or any member of the public regarding theadvisability of trading in the Contract(s). ETF Related Parties only relationship to OneChicago is the licensing of certain trademarksand trade names of PowerShares and Nasdaq respectively. The ETF Related Parties are not responsible for and have not participatedin the determination of the timing of, prices at, or quantities of the PowerShares QQQ® to be listed and have no obligation orliability in connection with the administration, marketing or trading of the PowerShares QQQ®. The PowerShares QQQ® have notbeen passed on by the ETF Related Parties as to their legality or suitability. The PowerShares QQQ® are not issued, endorsed, sold,or promoted by the ETF Related Parties. The ETF Related Parties make no warranties and bear no liability with respect to thecontract(s).”“Russell 2000® is a trademark and service mark of the Frank Russell Company.""SPDR® S&P 500® ETF®”, are trademarks of The McGraw-Hill Companies, Inc. and State Street Global Markets, LLC.