Taking stock in biotechnology futures

Abstract

Investors now have a new tool to help them manage the risk associated with biotechnology investment. Individual and professional investors can more confidently invest in companies whose products take years to develop and potentially several more to gain regulatory approvals and commercialise. This paper focuses on the development of the first stock index futures for the biotechnology market. Together, the Chicago Mercantile Exchange and the NASDAQ Stock Market, Inc. have launched an investment product to help reduce risk and foster greater confidence in biotechnology investment. By managing risk in the biotech sector, Biotechnology Index futures should appeal to a broader base of investors while offering greater visibility to biotechs included in the Index.