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Equity CFD Example 1:Long Position
Anglo American is trading at a level you think is very low due to the ZAR/USD. You think this will present a nice short term trading opportunity, so you decide to buy 5000 shares at R140.00. You pay no UST, VAT or STRATE, saving yourself R2351.00.
| Price of Anglo American Shares | R 140.00 |
| Number Of Shares | 5000 |
| Value of shares | R 700,000 |
| UST; VAT; ITL; Strate | R 0.00 |
| Commission | R 2,450 |
| Total Transaction Value | R 702,450 |
| Margin Requirement (10%) | R70,000 |
You need to have R70,000 available in your account to execute this trade.
Daily Financing
On an overnight basis you need to pay financing for this position based on SAFEY (for SA shares) and the daily closing value of the shares. Your financing rate will be SAFEY + 2% (assume SAFEY to be 7,5%) and the closing value of the shares. The closing price for the day is R 142.00. You will pay, 5000 (shares) x R142.00 (share price) x 9,5%/365 = R184.79 for holding the position overnight. This will be debited from your trust account by the next trading day.
Closing the Position
A day later Anglo American is quoted at R148.00/R148.20 and you decide to sell a CFD on 5000 shares
R148.00.
| Price of Anglo American Shares | R 148.00 |
| Number Of Shares | 5000 |
| Value of shares | R 740,000 |
| UST; VAT; ITL; Strate | R 0.00 |
| Commission | R 2,590 |
| Total Transaction Value | R 737,410 |
| Profit on Trade | R34,960 |
| Funding Cost | R184.79 |
| Overall Profit | R 34,775.21 |
This represents a return of 49,7% on the initial margin outlay of R70,000.
Equity CFD Example 2:Short Position
You believe that Old Mutual is overvalued, so you decide to sell (short) a CFD on 20,000 shares. The Old Mutual share price is quoted at R I 5.00/R 15.05 and you sell a CFD on 20,000 Old Mutual shares at R 15.00.
| Price of Old Mutual Shares | R 15.00 |
| Number Of Shares | 20,000 |
| Value of shares | R 300,000 |
| UST; VAT; ITL; Strate | R 0.00 |
| Commission | R 1,050 |
| Total Transaction Value | R 298.950 |
| Margin Requirement (10%) | R30,000 |
You need to have R30,000 available in your account to execute this trade.
Daily Financing
On an overnight basis you will receive financing for this position based on SAFEY (for SA shares) and the daily closing value of the shares. Your financing rate will be SAFEY -2,25% * (assume SAFEY to be 7,5%). In this example you will receive 20,000 x R15.00 x 5,2%/365 = R 43.15 per day. This will be credited to your trust account by the next trading day. Thereafter, this calculation will be made for each day that you hold the CFD position and the resulting financing revenue credited to your account daily.
Closing The Position
A day later Old Mutual is quoted at R14.25/R14.30, so you decide to buy (go long) back the CFD on 20,000 shares at R 14.30.
| Price of Old Mutual Shares | R 14.30 |
| Number Of Shares | 20,000 |
| Value of shares | R 286,000 |
| UST; VAT; ITL; Strate | R 0.00 |
| Commission | R 1,001 |
| Total Transaction Value | R 287,001 |
| Profit on Trade | R 11,949 |
| Financing Income | R43.15 |
| Overall Profit | R 11,992.15 |
This represents a return of 46,6 % on the initial margin outlay of R30,000.
