Dividend Neutral Stock Futures (DNSFs) are Derivatives Instruments that give investors exposure to the price movements of an underlying Share while stripping out inherent risk in dividend assumptions and Futures pricing. The contract brings together a Single Stock Futures (SSFs) Contract and a Dividend Futures Contract.
Who is this for?
This product suits market participants who want to remove dividend assumption risk. This includes hedgers seeking to protect an existing share portfolio and speculators seeking to profit on short-term movements in the futures contract price. This includes professional and private investors.
Features
- Eliminate the risks associated with assumed dividends.
- JSE Clear, the Exchange’s clearing house, guarantees the trades, while the regulatory framework removes counterparty risk.
- Futures are capital-efficient way to gain exposure to shares.
- Lower brokerage fees than trading in the underlying shares.
- Contracts are liquid and easily traded.
- Provide an opportunity to protect and hedge share portfolios.
- Although the dividend risk is eliminated, you still assume the risk associated with gearing around SSF contracts. Gearing offers significant returns but can also result in significant losses if the market moves against an investor’s position. SSFs are not capital protected, and investors may lose (or make) more money than their initial margins. Only experienced investors or investors aided by experienced advisors, should participate in this market.
How to get it
Register as a client with an authorised JSE Equity Derivatives member