single stock futures noob question about leverage

when a SSF is quoted, for example, KLAC10 32.46 , is this on a per share basis like options? so in reality the cost of the future is 3246?
surely this isn't much leverage!

or does one contract cost 32.4, but you control 100 shares/3246 of stock?

The futures quote is a per unit price - like with gold or oil. Multiply that by the contract size and you get the value. You leverage is that value divied by the margin requirement.

so the future costs 3246 in this case?

The leverage comes from the fact you're paying margin rather than the entire notional value of the share.

Chartsy said:

so the future costs 3246 in this case?

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If the price is 32.46, then the value of the futures contract is 3246.

wee bit confused here

arabian! i can see you spying over this; go on skype and spank my ass into sense

Chartsy said:

wee bit confused here

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There's no "cost" to a futures contract. There's a value, as defined by price x size, but since a futures contract is an agreement to do a future exchange, you aren't actually buying or selling anything at present - thus, no "cost". You do, however, have to put up margin. I understand that to be something like 20% of the value of the contract. So if you take a position in KLAC10 at 32.46 then the value of that position is 3246 and your margin will be something like 650.

ok i get you know , thankin'you

To the best of my knowledge, the way a single stock futures - SSF contract works. Let's say xyz stock is trading at $40 as 1 SSF contract is 100 shares. The cost of SSF contract will be $4,000 (1 contract = 100 shares x $40 per share in xyz = $4,000). But you only need a margin of 20% of the contract at $4,000 which is $800. So $800 gives you the buying power of $4,000 which is 1/5 buying power.

I hope I have helped you understand how SSF's work

If any of this is incorrect please someone correct me. I have not traded in SSF's but have read information on them which I believe to be correct.

UPDATE: Something I forgot to mention, with SSF there are downtick and upticks like in indices, but the minimum uptick or down tick is 0.01 cents. You can instead exploit the bid and ask price. Profit from between the pennies. As each contract is 100 shares, each individual share is worth $1. So in the above example I gave with the stock xyz trading at $40, if the price was to go up to $40.10 cents. You take 0.10 cents and multiple it by 1 contract that you have bought and you just made $10 (1 contract = 100 shares x 0.10 cents = $10). So there you go.

sopodo said:

Let's say xyz stock is trading at $40 as 1 SSF contract is 100 shares. The cost of SSF contract will be $4,000 (1 contract = 100 shares x $40 per share in xyz = $4,000). But you only need a margin of 20% of the contract at $4,000 which is $800. So $800 gives you the buying power of $4,000 which is 1/5 buying power.

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See my earlier post in this thread about "cost" vs. "value".

Rhody Trader said:

See my earlier post in this thread about "cost" vs. "value".

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I read your earlier posts and understand fully what you mean by a futures contract not having a cost. But my example above is pretty much the exact same thing to what your saying, but I am showing the cost in the future. So the original poster could better understand the margin costs in the underlying stock of that particular futures contract.

sopodo said:

I read your earlier posts and understand fully what you mean by a futures contract not having a cost. But my example above is pretty much the exact same thing to what your saying, but I am showing the cost in the future. So the original poster could better understand the margin costs in the underlying stock of that particular futures contract.

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No, you're doing EXACTLY what the original poster was doing by conflating "cost" with "value". The value of the contract is price x size (40 x 100 = 4000). That is not the cost. In fact, the required margin isn't a cost either. It's a deposit. The commission charged by the broker would be a cost.

okay many thanks for clearing this up