Investors will soon have another way to bet on hot stocks like Nvidia (NVDA.US) and SpaceX (SPCX.US) without directly trading any shares.
CME Group Inc is set to launch single stock futures on Monday, allowing investors to hedge or speculate on more than 50 of the largest US companies. These contracts do not require complex knowledge of options trading but offer leverage and are cash-settled based on the closing price of the underlying stocks.
The world's largest derivatives exchange is betting on two trends—the rise of retail trading and the current environment of limited supply in hot IPO stocks—to drive the success of single stock futures. This instrument, which failed to gain widespread adoption in the US market after its first launch 24 years ago, is now being reintroduced by CME Group Inc in hopes of a different outcome.
Where to begin
Tim McCourt, global head of equities, FX, and alternative products at CME Group Inc, said in a phone interview: "This has the ability to bring a lot of new traders into our ecosystem." He noted that the exchange's target audience includes both retail investors and institutional investors like asset managers. CME Group Inc has already partnered with more than 35 retail-facing intermediaries to help promote this futures product; for institutional investors, it will serve as a new risk management tool.
The rationale for just over 50 US stocks
Single stock futures aim to attract retail investors. Unlike options, they provide leveraged exposure without requiring investors to understand complex concepts like "Greeks"—the parameters used to quantify financial risk in options trading, including Delta, Gamma, and others that determine how stock price changes, volatility, time, and interest rates affect derivative pricing. One application of single stock futures is helping investors gain long or short exposure to companies with limited stock supply. This scenario recently occurred during SpaceX (SPCX.US)'s IPO, when hot stock supply was constrained. Investors who missed out on allocations may use futures to increase exposure with greater capital efficiency.
Futures are simpler than options, potentially making them more appealing to retail investors. Martin Franchi, CEO of futures broker NinjaTrader, said retail traders often prefer instruments they understand. "There may be investors who are confused by all those Greeks and related concepts, and see futures as a simpler way," he said. "The level of retail participation in the market is different now, so this time around, a lot could change with single stock futures."
This launch comes at a sensitive time for CME Group Inc. The Middle East war has benefited Intercontinental Exchange Inc's Brent crude oil trading system, while CME Group Inc's West Texas Intermediate (WTI) futures business faces competitive pressure. Meanwhile, overseas derivatives trading platforms like Hyperliquid Strategies Inc are seeing rapid volume growth, and Kalshi Inc and Polymarket are dominating the emerging prediction market space.
Extended trading hours
CME Group Inc's single stock futures will offer trading 23 hours a day, five days a week, far longer than the standard stock market session of 9:30 a.m. to 4:00 p.m. Eastern Time. These quarterly futures contracts come in two sizes: larger contracts covering 55 stocks, each representing 100 shares, similar to typical options contracts; and 22 micro futures contracts representing 10 shares each. The latter will include the "Magnificent Seven" tech companies, plus another 15 firms like Micron Technology (MU.US), Pfizer (PFE.US), and Walmart (WMT.US).
Futures products are common in global stock indexes and commodities, but single stock futures have had a rocky history in the US. These contracts were banned for nearly 20 years until a 2000 regulatory agreement established a supervisory framework, with trading rules approved in 2002. They finally began trading later that year but failed to attract sufficient market interest and were phased out by 2020. Shortly after, regulators lowered the minimum capital requirements for trading single stock futures, hoping to revive the market. CME Group Inc's latest launch also requires approval from both the US Securities and Exchange Commission and the Commodity Futures Trading Commission.
Terry Duffy, chairman and CEO of CME Group Inc, said on a July 22 quarterly earnings call: "When we first launched this product, it failed quite miserably. But the world has changed since 2000."
Success in markets like India
Single stock futures have succeeded in markets like India, where they are used to establish leveraged directional positions, hedge stock portfolios, or profit from arbitrage opportunities. They are also a core tool for arbitrage funds, which typically buy physical stocks while selling futures contracts to capture the price premium between them. In Europe, financial institutions use single stock futures to improve balance sheet efficiency, especially during quarterly and year-end reporting periods. Jeremy Cohen, global head of derivatives broker Stellar Securities, said these products are also used to manage long positions, hedge short exposure, and manage net dividend risk.
However, like any financial instrument, new contracts carry risks. Matt Cashman, head of investor education at the Options Clearing Corporation, noted that trading outside normal hours—including the volatile minutes after corporate earnings reports—can lead to highly unstable market movements. There are also commission issues. Unlike stock or options trading, where many retail platforms often charge no trading fees and generate revenue by selling order flow to market makers, retail traders in the futures market typically pay commissions.
Stuart Kaiser, head of US equity trading strategy at Citigroup, believes the ultimate success of this product may depend on the institutions driving it. "Retail traders are already accustomed to getting leverage through call options or leveraged ETFs," he said. "If futures want to enter this space, they will likely need discount brokers to push the product and allow clients to trade it."
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