Jack Goodwin had lately read an article on using futures contracts on individual stocks for hedging purposes. He held around 500 shares of Abbott Laboratories in his trading portfolio. While he was concerned regatding the share price dropping in the short run, he was not bearish over the future.
Naturally, he possibly will sell right now and buy later, but that would mean he would have a taxable capital gain, which he wanted to prevent. He believed the single-stock-futures contracts might present the chance to hedge the price risk.
Single-Stock Futures case study solution
PUBLICATION DATE: December 28, 2011 PRODUCT #: UV5638-HCB-ENG
This is just an excerpt. This case is about INNOVATION & ENTREPRENEURSHIP
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