The quest for sound hedging and risk transfer in equity markets

The use of universal stock futures (futures on single stocks) as a risk management tool has been on the increase since their launch in 2001. This simple product can be used in some basic but very effective hedging techniques. In their book, Single Stock Futures: A Trader’s Guide, from which an edited extract follows, Patrick Young and Charles Sidey explore how wealth managers can effectively implement such techniques and discuss the advantages of risk transfer and central counterparty (CCP) in the context of the new undertakings for collective investment in transferable securities (Ucits) directives.