Examples of CFD trades when compared to a Financial Spread Betting

Example 1 - Share Dealing

We wish to take a Long position in Barclays in anticipation of a rise in price and wish to expose ourselves to 1000 Shares:

Notes:

The interest rate on the CFD is calculated as follows:
Value of position = 1000 Shares x £4.43 (the Mid price) = £4430
Interest @ 5.5% p.a. of the total position = £4430 x 5.5% = £243.65 p.a.
£243.65 divided by 365 = £0.667.
(Please do check exactly how the Interest charge is computed with the providers - there will be differences).
The wider spread and higher price on the Financial Spreadbet reflects that it is a quarterly contract and takes account of Interest and Dividends.
The profit is calculated by valuing the positions at the prevailing potential closing price of the position i.e. the Bid Price - Opening Offer price x Size of Exposure.
Interest will accrue on the CFD Daily until the position is closed.
No interest would have accrued had the position not been held overnight.

We wish to take a Short position on the Dow Jones Index in anticipation of a fall in price:

Notes:

The Notional Trading Requirement on the Financial Spreadbet is usually at a fixed level e.g. 400 - you would multiply this number by your stake to calculate your Margin Requirement e.g. 400 x £10 = £4000.
The interest rate on the CFD is calculated as follows:
Value of position = £10 Per point x 8486.5 (the latest Mid price) = £84,865
Interest @ 1.5 % p.a. of the total position = £84865 x 1.5% = £1272.97 p.a.
£1272.97 divided by 365 = £3.487.
(Please do check exactly how the Interest charge is calculated - there will be differences.)
The wider spread and higher price on the Financial Spreadbet reflects that it is a quarterly contract and takes account of Interest and Dividends.
The profit is calculated by valuing the positions at the prevailing potential closing price of the position i.e. the Offer Price - Opening Bid Price x Size of Exposure.
Interest will accrue on the CFD Daily until the position is closed.

We wish to take a Long position in Barclays in anticipation of a rise in price and wish to expose ourselves to 1000 Shares:

	Financial Spreadbet	Contract for Difference
Bid Price	£4.2935	£4.275
Offer Price	£4.3075	£4.285
Type of Contract	Quarterly	Open until Closed
Size of Exposure	£10 per point	1000 Shares
Value of Contract	£4307.50	£4285
Commission (if applicable)	£0	£10.71 (0.25%)
Margin Requirement at 10%	£430.75	£428.50
Price appreciates 15p and the position is held overnight.
Bid Price	£4.4435	£4.425
Offer Price	£4.4575	£4.435

Interest Charge	£0	£0.67


Current Profit	13.6 points @ £10	14p x 1000 Shares Less interest & Commission
Profit £'s	£136	£128.62

Notes:

The interest rate on the CFD is calculated as follows:
Value of position = 1000 Shares x £4.43 (the Mid price) = £4430
Interest @ 5.5% p.a. of the total position = £4430 x 5.5% = £243.65 p.a.
£243.65 divided by 365 = £0.667.
(Please do check exactly how the Interest charge is computed with the providers - there will be differences).
The wider spread and higher price on the Financial Spreadbet reflects that it is a quarterly contract and takes account of Interest and Dividends.
The profit is calculated by valuing the positions at the prevailing potential closing price of the position i.e. the Bid Price - Opening Offer price x Size of Exposure.
Interest will accrue on the CFD Daily until the position is closed.
No interest would have accrued had the position not been held overnight.

We wish to take a Short position on the Dow Jones Index in anticipation of a fall in price:

	Financial Spreadbet	Contract for Difference
Bid Price	8534	8559
Offer Price	8544	8564
Type of Contract	Quarterly	Open until Closed
Size of Exposure	£10 per point	£10 per point
Value of Contract	£85,340	£85,559
Margin Requirement at 5%	£4267	£4279
Price falls 75 points and the position is held overnight.
Bid Price	8459	8484
Offer Price	8469	8489

Interest Received	None	£3.49


Current Profit	65 Points @ £10	70 Points @10
Profit £'s	£650	£703.49

Notes:

The Notional Trading Requirement on the Financial Spreadbet is usually at a fixed level e.g. 400 - you would multiply this number by your stake to calculate your Margin Requirement e.g. 400 x £10 = £4000.
The interest rate on the CFD is calculated as follows:
Value of position = £10 Per point x 8486.5 (the latest Mid price) = £84,865
Interest @ 1.5 % p.a. of the total position = £84865 x 1.5% = £1272.97 p.a.
£1272.97 divided by 365 = £3.487.
(Please do check exactly how the Interest charge is calculated - there will be differences.)
The wider spread and higher price on the Financial Spreadbet reflects that it is a quarterly contract and takes account of Interest and Dividends.
The profit is calculated by valuing the positions at the prevailing potential closing price of the position i.e. the Offer Price - Opening Bid Price x Size of Exposure.
Interest will accrue on the CFD Daily until the position is closed.

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