The success of your long/short equity strategy rests upon the ability to build a portfolio of carefully selected equities while effectively managing your exposure to the overall market. Stock index futures provide an uncomplicated solution for managing the systematic risk in your portfolio while also providing the opportunity to trade short-term opportunities in the stock markets.

Model Trades
Example 1. You’ve identified several potential investment candidates to add to your portfolio, but don’t want to increase your overall net exposure to the stock market. You decide to go short a beta-equivalent position in electronic stock index futures while maintaining the opportunity to benefit from above-average returns on individual stocks.

Example 2. Your model shows that the recent break of 12% in the S&P 500 has left your fund too short. You purchase the required number of futures contracts to rebalance the fund, bringing it back to the original mix to gain exposure and ride the possible market turn.

For more information, contact Keith Velcich at (312) 928-8102 or via e-mail at hfm@STStrading.com.