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How you can trade international stocks using single stock futures

by , 19 May 2015

If you trade single stock futures on South African stocks, do you know you can trade international stocks too without taking your money offshore?

You can do this by trading the Johannesburg Stock Exchange's International Derivatives.

So what are International Derivatives? What are the benefits of trading them? And how can you trade them?

Read on to find out…


Introducing International Derivatives


In 2008, the JSE introduced International Derivatives. These offer you a way to trade single stock futures on select blue-chip international stocks. The stocks have listings on US and European stock markets.

As the JSE explains, International Derivatives are cash settled single stock futures on a number of different international stocks. As they’re cash settled, you’ll never take ownership of the stock. You’ll gain or lose depending on the performance of the underlying share.


The differences between International Derivatives and single stock futures


Just like trading single stock futures, you trade International Derivatives on margin. But as you’re trading international stocks, there are currency differences involved.

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Unlike trading single stock futures, where one contract equals 100 underlying shares, one International Derivatives contract equals one underlying share.

Just like single stock futures, you can buy or sell International Derivatives.


The benefits of trading International Derivatives


There are a number of benefits to trading International Derivatives…

  • You don’t have to worry about exchange controls and taking your money offshore as trades are in rands.
  • As with other forms of trading, it’s cheaper than investing in the underlying share.
  • It offers you a good way to diversify your portfolio by trading in international stocks.


How to trade International Derivatives


You can trade these through a stock broker offering derivatives trading. If you already have a single stock futures trading account, just speak to your broker about it.

If you don’t have a broker, visit the JSE’s website for a list of equity derivatives brokers.

But before thinking about trading these derivatives, make sure you understand the risks.

So there you have it. How you can trade international stocks using single stock futures.

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