Client goes long with a CFD position
and exits with a profit: A client has R100 000 in his
margin account, ie the client can buy the underlying
security with a value of R1 000 000, assuming that the
underlying security requires a 10% margin.
The client buys 1000 BIL CFD @ R200.00,
with the nominal exposure therefore being R200 000.00.
Assuming a required margin of 10% then R20 000.00 of
the clients margin account will be blocked.
At the close of business, the price
of BIL is R204.00. Thus the BIL CFD is trading at R204.00.
The blocked margin for the next day would therefore
be R20 400.00 assuming that the position is open the
following day.
The SAFEY overnight rate is assumed
to be 8%.
The calculations for Brokerage and charges would be
as follows:
| 1 |
Profit
(R204.00-R200.00) |
= R4
000.00 Profit (1000 CFDs * R4.00) |
| 2 |
Brokerage charge |
= R700.00 (0,35%
* R200 000.00) |
| 3 |
Overnight long interest
charge
(This premium will be calculated
on a daily basis.) |
= (Closing m-t-m
* long position funding rate * number of days) /
number of days in year
= (R200 000.00 * (8%+2%) * 1)/365
= R54.80 |
| 5 |
The closing margin
balance:
Opening margin
m-t-m profit
Premium
(Brokerage charge plus
Overnight Long interest charge)
Closing margin |
R100 000.00
R4000.00
(R754.80)
R103 245.20 |
| Daily
gain from the CFD position |
R3 245.20 |
| Blocked Margin (10%
* R20 400,00) |
R20 400.00 |
| Available for payment
to client (R103 245,20 - R20 400) |
R82 845.20 |
