Jack Goodwin had recently 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. He was bullish over the long term while he was concerned regarding the share price falling in the short run.
Of course, he could sell now and buy later, but that would mean he would have a taxable capital gain, which he desired to avoid. He believed the single stock futures contracts might present the chance to hedge the price risk.
Single-Stock Futures a case study solution
PUBLICATION DATE: December 28, 2011 PRODUCT #: UV5638-PDF-ENG
This is just an excerpt. This case is about INNOVATION & ENTREPRENEURSHIP
Related Case Solutions & Analyses:
Employee Retention
Salary Issues in an Organization
WWF’s Living Planet @ Work: Championed by HP
Jos. A. Bank Clothiers, Inc.: The Men’s Wearhouse Bid
Environment Canada
Chance Encounters II
DD Traders: Sourcing for DEMDACO
Enron Development Corp.: The Dabhol Power Project in Maharashtra, India (B)
Weetman Pearson and the Mexican Oil Industry (A)
Armscor: Life After Apartheid?
