Stock Perps Are Here.

The Lesson Is Still Leverage.

By John, Founder & CEO, TradeShield Labs

On November 3, the US Commodity Futures Trading Commission said perpetual futures on individual stocks can trade on CFTC-registered exchanges for the first time (CFTC statement). The contracts were deemed approved as security futures, so they fall under the regulatory frameworks of both the CFTC and the SEC (CFTC press release). Kalshi listed perps on four individual stocks the same day (Kalshi).

The approval is already being challenged in court. An industry group, the Capital Markets Alliance, whose members include Cboe, Citadel Securities and the Healthy Markets Association, sued in federal court in New York on November 3 to vacate it (Cboe). The judge denied the group's request for a temporary restraining order the same day, so trading continues, but wrote that the group is likely to succeed on its claim that the CFTC lacked authority to approve the contracts. Further briefing is scheduled for November 6 and November 10 (court docket). The rules around this product could still change.

I'm not here to tell you whether that is good or bad, or what to trade. I want to talk about the one thing that makes perps feel exciting and the one thing that hurts people most: leverage.

What a perp actually is

A perpetual future is a futures contract with no expiration date. Instead of settling on a fixed day, the people who are long and the people who are short swap periodic "funding" payments that keep the contract price close to the underlying price. You don't own the shares. You trade a contract that tracks the stock's price, usually with leverage (Kalshi Help Center).

For years this product lived mostly on crypto venues outside the US. MarketWatch called it "a trendy crypto-native trading product" that "exploded in popularity on offshore venues" (MarketWatch). Now the same mechanics are pointed at familiar company names. That familiarity is exactly why the lesson matters.

Lesson 1: Leverage changes the size of the move, not the odds

Leverage does not make you more right. It makes being right or wrong count more.

Here is the plain math, before fees and funding. Put up $1,000 with no leverage, and a 5% move against you costs $50. Put up the same $1,000 at 10x, and you control $10,000 of exposure. The same 5% move now costs $500, half your stake. At 20x, a 5% move costs the whole $1,000. In practice, a leveraged position is usually liquidated before the full stake is gone.

The first US stock perps cap leverage lower than that. Kalshi's first four launched with a maximum of 4.9x (Bitcoin Magazine). At 4.9x, that $1,000 controls $4,900, and a 5% move costs $245, about a quarter of your stake. Kalshi's own example shows that at 4x, a 25% drop wipes out the entire margin (Kalshi Help Center).

Single stocks can jump on earnings, guidance or other news. With leverage, one ordinary news day can do a lot of damage.

Lesson 2: Liquidation is a price, not a feeling

On a leveraged position, there is a price at which your position can be closed out for you. It doesn't care that you planned to hold, or that the move "should" reverse. If your account falls below the maintenance margin, the position can be liquidated, and Kalshi notes that in exceptional conditions losses can exceed the margin you posted (Kalshi Help Center).

So before any leveraged trade, the most useful question is not "how much can I make?" It is "at what price am I forced out, and how far is that from here?" If you can't answer that in one sentence, you don't know the trade yet.

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