Are you curious about how you can trade the price movement of a single company without actually buying its shares? This article explains what single-stock futures are, how they operate, and what you should consider before using them to earn passive income.
What are single-stock futures?
A single-stock future is a contract that obligates the buyer to purchase, and the seller to deliver, a specific amount of a particular stock at a predetermined price on a set future date. Unlike buying the stock outright, you never own the underlying shares; you only hold the right (or obligation) to settle the contract at expiration.
Key terms:
- Contract size – the number of shares covered by one future contract. For most exchanges this is one share, but some platforms bundle multiple shares into a single contract.
- Expiration date – the date on which the contract must be settled. Until then, the contract can be bought or sold on the secondary market.
- Settlement – the method used to close the contract at expiration. Settlement can be physical (actual delivery of shares) or cash‑settled (a cash payment based on the difference between the contract price and the market price of the stock).
- Leverage – because you only post a margin (a fraction of the contract’s notional value), futures allow you to control a larger position than you could with cash‑only buying, amplifying both potential gains and losses.
In essence, a single-stock future mirrors a traditional futures contract used for commodities, but the underlying asset is an equity security rather than a physical commodity.
How do they actually work?
When you enter a long (buy) position on a single-stock future, you are betting that the stock’s price will rise above the contract price by expiration. If the price is higher, you profit by the difference, minus any fees and the cost of margin. If the price is lower, you incur a loss of the same magnitude.
Conversely, a short (sell) position profits when the stock’s price falls below the contract price. Short positions can be useful for hedging a long equity portfolio or for speculative bets on a decline.
Because futures are traded on regulated exchanges, they benefit from standardized contract terms, transparent pricing, and centralized clearing that reduces counter‑party risk. However, the leverage inherent in futures means that a relatively small adverse price move can trigger a margin call, requiring you to add more funds or close the position.
Regulatory backdrop and a recent illustration
In September 2026, OG.com received authorization from the U.S. Securities and Exchange Commission (SEC) to offer single-stock perpetual futures to U.S. traders. The platform filed a Form 1‑N to register as a national securities exchange, clearing a major regulatory hurdle. This approval demonstrates that U.S. regulators are beginning to accommodate crypto‑adjacent futures products, provided they meet existing securities rules and coordinate with the Commodity Futures Trading Commission (CFTC).
Other exchanges have taken similar steps: Kraken partnered with the London Stock Exchange for tokenized UK stocks, and Coinbase launched stock perpetual futures for non‑U.S. users earlier in the year. These developments show a growing convergence between traditional finance (TradFi) and digital‑asset markets.
What this means for you
If you want to earn passive income or diversify your trading strategy, single-stock futures can offer several advantages:
- Capital efficiency – You can gain exposure to a stock’s price movement without tying up the full cash amount needed to buy the shares.
- Hedging – Futures let you protect an existing equity position from short‑term volatility.
- Continuous markets – Many futures platforms operate 24/7, allowing you to react to news and price swings outside regular stock‑market hours.
At the same time, the risks are significant. Leverage can magnify losses, margin calls can force liquidation, and cash‑settled contracts may be subject to different tax treatment than direct stock ownership. Understanding these dynamics is essential before allocating any portion of your portfolio to futures.
How to evaluate a single-stock futures product
Before you start trading, run through this short checklist:
- Regulatory status – Verify that the exchange is registered with the SEC (or relevant authority) and that the futures are cleared through a recognized clearinghouse.
- Margin requirements – Compare initial and maintenance margin levels; lower margins increase leverage but also raise liquidation risk.
- Settlement type – Decide whether you prefer cash settlement (simpler, no need to acquire shares) or physical settlement (useful if you eventually want to own the stock).
- Liquidity – Look at daily trading volume and bid‑ask spreads; higher liquidity reduces slippage when entering or exiting positions.
- Fee structure – Account for trading fees, funding rates (for perpetual contracts), and any custody or withdrawal charges.
- Risk controls – Use stop‑loss orders, set realistic position sizes, and monitor margin levels to avoid forced liquidations.
FAQ
Can I lose more than my initial investment?
Yes. Because futures are leveraged, a rapid adverse price move can exceed your posted margin, resulting in a margin call. If you cannot meet the call, the exchange may liquidate your position, and you could owe additional funds.
How are futures taxed compared to owning the stock?
In the United States, futures are generally taxed under Section 1256 of the Internal Revenue Code, which treats 60% of gains as long‑term and 40% as short‑term, regardless of holding period. This differs from the capital‑gains rules that apply to direct stock ownership.
Do I need a separate futures account?
Most platforms that offer single-stock futures require you to open a futures‑eligible account, which may involve additional agreements and a higher verification level than a standard spot‑trading account.
Is there a way to trade futures without high risk?
While risk cannot be eliminated, you can mitigate it by using low leverage, setting strict stop‑loss orders, and only allocating a small percentage of your overall capital to futures positions.
This article references reporting from cointelegraph.com.
