You decide to buy the FTSE 100 CFD on the 1st June 2005. A City
Index trader quotes you 4964/4968 and you buy 10 CFDs at 4968.
Opening Trade
Price of FTSE 100 CFD - 4968
Number of CFDs - 10
Value of CFDs - £49,680.00
Margin Requirement (7.5%) - £3,726.00
Daily Financing
On a nightly basis you pay financing for this position based on
Sterling LIBOR. Your financing rate might be LIBOR + 2.25%. Assume
this equates to a financing rate of (4.75% + 2.25%) 7.0% and the
closing price for the day is 5011. You pay 10 x 5011 x 7.0% / 365 =
£9.61for holding the position overnight. This will be debited from
your account on the next trading day.
Closing Trade
7 days later the FTSE 100 CFD is quoted 5025.2/5029.2 and you
sell 10 CFDs at 5025.2.
Price of FTSE 100 CFD - 5025.2
Number of CFDs - 10
Value of CFDs - £50,252.00
Closing Value of CFDs - £50,252.00
Opening Value of CFDs - £49,680.00
Profit on Trade - £572.00
Financing (7 days) - (£67.27)
Overall Profit on Trade - £504.73