The right, not the obligation, to buy or sell a stock at a set price. Priced using the “Greeks.”
swap_horizOver-the-counter contracts that mirror a stock's price moves.
Not available to U.S. retail trending_upExchange-listed futures on individual stocks. No time decay, cleared on a U.S. futures exchange.
New on NinjaTraderWhat are equity derivatives?
An equity derivative is a contract whose value comes from an underlying equity—either a single stock or a stock index. Instead of owning the asset, you hold a contract that tracks it. That structure is what lets traders use leverage, go long or short with equal ease, and tailor their exposure to a specific view on price.
The three products covered here (options, CFDs, and single stock futures) are the equity derivative products most retail traders encounter. They share that derivative DNA but behave differently in practice.
The role of derivatives in modern equity markets
Derivatives do a lot of heavy lifting in today's markets. Traders use them to hedge existing positions, speculate on direction with less capital than buying shares would require, and react to events such as earnings or macro news with precision. Because many derivatives are leveraged, they let participants express a view efficiently, which is part of why volume in listed derivatives has grown alongside the cash equity market.
For a broader primer on how these instruments work, see Foundations of Futures Trading.
Keep in mind that leverage amplifies both gains and losses.
How equity derivatives differ from owning the underlying stock
When you buy a share, you own a piece of the company. You get voting rights, potential dividends, and no expiration date. An equity derivative is different: you're trading a contract on the stock's price, not the stock itself.
That distinction can matter to traders for a few reasons. Derivatives typically offer leverage, so a smaller amount of capital controls a larger position. Many are easy to short, with no special borrowing required. And several carry an expiration date, which means timing is part of the trade. To see how this compares directly to share trading, check out the Advantages of Trading Futures vs. Stocks.
The main types of equity derivatives
Each of these products gets you exposure to a stock's price without owning the shares. They just go about it differently. Options are rights-based, CFDs are leveraged and traded over-the-counter (and off-limits to U.S. retail traders), and single stock futures are linear and exchange-listed. Here's how each works.
Stock options: rights, not obligations
Stock options give the buyer the right but not the obligation to buy or sell a stock at a set price. Their value depends on the underlying price, strike, time to expiration, and implied volatility, which is why options pricing requires the “Greeks” (delta, gamma, rho, theta, vega).
In plain terms: an option's price moves with the stock but also erodes as expiration approaches (time decay) and shifts with changes in volatility. That added complexity gives options flexibility, but it also means you're managing more moving parts than just direction. For traders coming from an equities background, How Stock and Options Trading Prepares Futures Traders is a useful next read.
Contracts for difference (CFDs): OTC, leveraged price exposure
Contracts for difference (CFDs) are over-the-counter retail derivatives that mirror a stock's price movement without ownership of the underlying. They are not available to U.S. retail traders under SEC and CFTC rules but are widely used in Europe, Australia, and other regions.
A CFD is an agreement between you and a broker to exchange the difference in a stock's price from when you open the position to when you close it. Because they trade over-the-counter (OTC), meaning directly with a broker rather than on a centralized exchange, so your counterparty is the broker, not a clearing house. For more on this structure, see What Is the Difference Between Futures and CFDs? and Advantages of Trading Futures vs. Forex and CFDs.
Single stock futures: linear, exchange-listed contracts on individual stocks
Single stock futures are exchange-listed futures contracts on individual equities. Unlike stock options, they carry no time decay and no option pricing “Greeks”; and unlike CFDs, they are cleared on a U.S. futures exchange rather than traded OTC against a broker.
SSF prices generally move in line with the underlying stock, so a $1 move in the stock typically results in a corresponding change in the contract value. There is no option premium to erode or volatility surface to model, just leveraged, exchange-cleared exposure to a single stock.
Which one's right for you? It depends on the trade-offs you care about.
Side-by-side: single stock futures vs. CFDs vs. stock options
Here's how the three products compare across factors when you're deciding which fits your strategy.
| Factor | Stock options | CFDs | Single stock futures |
|---|---|---|---|
| Structure | Right, not obligation, to buy/sell at a strike | Contract mirroring price difference | Linear futures contract on one stock |
| Settlement | Cleared via the options clearing system | Settled OTC against the broker | Cleared on a U.S. futures exchange |
| Time decay | Yes (theta) | None | None |
| Leverage | Yes, embedded in premium | Yes, broker-set | Yes, via performance-bond margin |
| Exchange-listed vs. OTC | Exchange-listed | OTC | Exchange-listed |
| U.S. retail availability | Available | Not available | Available |
| Primary regulator | SEC | Varies by region (no U.S. retail access) | CFTC and SEC (jointly) |
For a focused look at two of these, see Advantages of Trading Futures vs. Options.
Who trades each product and why
There's no single “right” equity derivative, just the one that best matches how you trade and why. That comes down to two things: what you're trying to do with the position, and the timeframe you're working in.
Hedging vs. speculation
Traders reach for equity derivatives for two broad reasons. Hedging means using a derivative to offset risk in an existing position, for example by taking a short position to help cushion a long stock holding against a downturn. Speculation means taking a position to react to an expected price move, using leverage to make capital work harder. All three products can serve both purposes, though availability and structure shape which one fits.
Day, swing, and position traders
Day traders often favor instruments with tight pricing and no overnight complexity. Linear products like single stock futures can be a clean fit. Swing traders holding positions for days or weeks may weigh how time decay affects options versus the steadier behavior of futures. Longer-term position traders tend to care most about cost of carry, margin efficiency, and how leverage affects holding a position over time. The Why Trade Futures hub digs deeper into these trade-offs.
Bottom line: the product follows the strategy, not the other way around. Get clear on your goal and your timeframe, and the right fit tends to narrow itself down fast.
Capital, margin, and regulatory considerations
Leverage is a defining feature of equity derivatives, and it comes with rules. Futures, including single stock futures, use performance-bond margin, a good-faith deposit set by the exchange rather than money borrowed at interest. Options require paying a premium up front. CFDs use broker-set margin but, again, are not available to U.S. retail traders.
On the regulatory side, single stock futures are jointly regulated by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Futures commission merchants (FCMs) that offer security futures products must be National Futures Association (NFA) members and registered as Security Futures Product Broker-Dealers. Knowing which regulator oversees a product can help you understand the protections and rules that apply.
Trade equity derivatives with NinjaTrader
NinjaTrader, a CFTC-regulated futures brokerage and trading platform, provides advanced charting, advanced trade management (ATM) strategies, and Order Flow+ tools that traders use to execute strategies across exchange-listed equity derivatives, including equity index futures and single stock futures.
Whether you're new to derivatives or adding single stock futures to an existing playbook, NinjaTrader gives you the platform, data, and 24/5 support to trade them with confidence.
Security futures product disclosure: NinjaTrader offers security futures. Security futures are not suitable for everyone. Promo first used: 07/15/2026. View the risk disclosure statement, including the risk disclosure statement for security futures products, at https://ninjatrader.com/ssf-risk/.
Glossary
- Centralized exchange
- A regulated marketplace where standardized contracts are listed, traded, and centrally cleared.
- Greeks
- A set of measures (delta, gamma, rho, theta, vega) that describe how an option's price reacts to changes in the underlying price, time, and volatility.
- Leverage
- Using a smaller amount of capital to control a larger position, which can amplify both gains and losses.
- OTC (over-the-counter)
- Trading done directly between two parties, such as a trader and a broker, rather than on a centralized exchange.
- Performance-bond margin
- A good-faith deposit required to hold a futures position, set by the exchange rather than borrowed at interest.
- Time decay
- The gradual erosion of an option's value as it approaches expiration, all else being equal.
FAQs on trading equity derivatives
What is an equity derivative?
An equity derivative is a financial contract whose value is derived from an underlying stock or stock index. Instead of owning the asset, you hold a contract that tracks its price, which is what allows for leverage and the ability to go long or short.
What are the main types of equity derivatives?
The three main types available to retail traders are stock options, contracts for difference (CFDs), and single stock futures (SSFs). Each differs in pricing, settlement, leverage, and where it can be traded.
Are CFDs legal in the U.S.?
CFDs are not available to U.S. retail traders under SEC and CFTC rules. They're widely used in Europe, Australia, and other regions, but U.S. retail traders use alternatives such as options and single stock futures.
How are single stock futures different from stock options?
Single stock futures are linear, exchange-listed contracts that carry no time decay and no option pricing “Greeks.” Stock options give you the right but not the obligation to buy or sell at a set price, and their value depends on factors like time to expiration and implied volatility.
How do equity derivatives compare to owning the underlying stock?
Owning a stock gives you direct ownership, voting rights, and potential dividends with no expiration. Equity derivatives instead let you trade a contract on the stock's price, often with leverage and the ability to short easily, and sometimes with an expiration date that makes timing part of the trade.