Expiring Index CFD - Long Example
Craig believes that the Australian share market is undervalued and will strengthen in the coming days.
The Australian AU200 Index CFD (AU200SEP11) is currently bid 5104.0/5106.0 offered. Craig buys 20 AU200SEP11 Index CFDs at 5106.0, requiring an Initial Margin of 5%. No commission is charged on this trade, instead, the quote includes the MFGA Spread.
Open Long Position
| Trade | Buy AU200SEP11 | Comment |
| Number of CFDs |
20 |
|
| Contract Price |
5106.0 |
|
| Contract Value |
AUD 102,120 |
Number of CFDs x Contract Price |
| Initial Margin |
AUD 5,106 |
5% of Contract Value |
| Initial Outlay |
AUD 5,106 |
|
Because Craig is trading a CFD over the underlying futures contract, the cost of carry is already priced into the contract therefore requiring no funding interest to be applied to the CFD position.
As Craig predicted the Australian share market rises. By the end of the week, the AU200SEP11 Index CFD price has risen to 5185.0, so Craig decides to take his profit. He closes his position at 5183.0, and makes a profit of AUD 1,540.
Close Long Position
| Trade | Sell AU200SEP11 | Comment
|
| Number of CFDs |
20 |
|
| Contract Price |
5183.0 |
|
| Contract Value |
AUD 103,660 |
Number of CFDs x Contract Price |
| Profit/Loss |
AUD 1,540 |
(Closing - Opening) Contract Value |
| Funding Interest |
None |
Implied within the underlying futures price |
| Total Profit/Loss |
AUD 1,540 |
Profit/Loss |
| Return on Outlay |
30.16% |
Total Profit/Loss divided by Initial Outlay |
The total profit on this trade is AUD 1,540 (reflecting a return of 30.16% on initial outlay).
Rolling Index CFD - Short Example
Mary believes that the Australian index will weaken.
Australia Index Rolling CFD (AU200CASH) is currently bid 5250.5/5252.5 offered. Mary sells 20 AU200CASH Index CFDs at 5250.5, requiring an Initial Margin of 5%. No commission is charged on this trade, instead, the quote includes the MFGA Spread.
Open Short Position
| Trade | Sell AU200CASH | Comment
|
| Number of CFDs |
20 |
|
| Contract Price |
5250.5 |
|
| Contract Value |
AUD 105,010 |
Number of CFDs x Contract Price |
| Initial Margin |
AUD 5,250.50 |
5% of Contract Value |
| Initial Outlay |
AUD 5250.50 |
|
As Mary predicted the Australian Index falls. Mary holds her position past Business Close, so a funding rate of 3% below the MFGA Base Rate (for the purpose of this example 4.75%) is applied. A Dividend Adjustment (reflected in Mary’s CFD account as a cash adjustment) of AUD1.01 is applied to her account to reflect the dividends paid on the constituents of the Australian Index covered by the underlying futures contract.
Close Short Position
| Trade | Buy AU200CASH | Comment |
| Number of CFDs |
20 |
|
| Contract Price |
5205.5 |
|
| Contract Value |
AUD 104,110 |
Number of CFDs x Contract Price |
| Profit/Loss |
AUD 900 |
(Closing - Opening) Contract Value |
| Funding Interest |
AUD 5.01* |
Open Contract Value x Interest Rate / 365 calculated each day the contract is held open using the settlement price of the Contract Security, and posted daily |
| Dividend Adjustment |
(AUD 1.01) |
Cash adjustment reflecting the amount of any constituents’ dividends or distributions and their weightings in the relevant index covered by the underlying Futures Contract. |
| Total Profit/Loss |
AUD 904 |
Profit/Loss |
| Return on Outlay |
17.22% |
Total Profit/Loss divided by Initial Outlay |
The total profit on this trade is AUD 904 (reflecting a return of 17.22% on initial outlay).
*For the purpose of this example Mary held her position for 2 days and the settlement price at the end of Day 1 was 5227.5 (5227.5 x 20 x 1.75% / 365 = AUD5.01).
Commodity CFD - Short Example
Craig believes that the price of oil is due for a correction and will weaken over the next month.
The US Oil CFD is currently bid 82.57/82.65 offered. Craig sells 1,000 US Oil CFDs at 82.57, requiring an Initial Margin of 5%. No commission is charged on this trade, instead, the quote includes the MFGA Spread.
Open Short Position
| Trade | Sell USOIL | Comment
|
| Number of CFDs |
1,000 |
|
| Contract Price |
82.57
|
|
| Contract Value |
USD 82,570 |
Number of CFDs x Contract Price |
| Initial Margin |
USD 4,128.50 |
5% of Contract Value |
| Initial Outlay |
USD 4,128.50 |
|
Because Craig is trading a CFD over the underlying futures contract, the cost of carry is already priced into the contract therefore requiring no funding interest to be charged (or earned) on the CFD position.
As Craig predicted the price of oil falls. Toward the end of the month, the US Oil CFD price has fallen to 78.50, so Craig decides to take his profit. He closes his position at 78.53, and makes a small profit of USD 4,040.
Close Short Position
| Trade | Buy USOIL | Comment |
| Number of CFDs |
1,000 |
|
| Contract Price |
78.53 |
|
| Contract Value |
USD 78,530 |
Number of CFDs x Contract Price |
| Profit/Loss |
USD 4,040 |
Closing - Opening Contract Value |
| Funding Interest |
None |
Implied within the underlying futures price |
| Total Profit/Loss |
USD 4,040 |
Profit/Loss |
| Return on Outlay |
97.8% |
Total Profit/Loss divided by Initial Outlay |
The total profit on this trade is USD 4,040 (reflecting a return of 97.8% on initial outlay).
|
