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Single-Stock Futures

Conroy, Robert M.

Case

Single-Stock Futures

Conroy, Robert M.

F-1640 | Published December 28, 2011 | 8 pages Case

Collection: Darden School of Business

Product Details

Jack Goodwin had recently read an article on using futures contracts on individual stocks for hedging purposes. He held about 500 shares of Abbott Laboratories in his trading portfolio. While he was concerned about the share price falling in the short run, he was bullish over the long run. Of course, he could sell now and buy later, but that would mean he would have a taxable capital gain, which he wanted to avoid. He thought the single-stock-futures contracts offered on the OneChicago Exchange might present the opportunity to hedge the price risk.

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