Example: Buying Hongkong Land

Opening the position

Say Hongkong Land Holdings is trading at the price of US$3.05/3.08 (note: this stock trades in US dollars). You think the price is due to rise, and decide to buy 20,000 shares as a CFD at US$3.08, the offer price. Your initial outlay is just 20% x 20,000 shares x US$3.08 = US$12,320. The same outlay with a regular stockbroker would only give you exposure to the performance of 4000 shares.

Our standard commission (exclusive of GST, if applicable) on this transaction is just 0.15% or US$92.4 (20,000 shares x US$3.08 x 0.15%) (See contract details).

Closing the position

A month later Hongkong Land has climbed to US$3.49/3.52 in the market and you decide to take your profit. You sell 20,000 shares at US$3.49, the bid price. The commission on this transaction is 0.15% or US$104.7 (20,000 shares x US$3.49 x 0.15%)

Your profit on the trade is calculated as follows: .

Profit on trade

To determine the overall profit on the transaction you would also have to take into account the commission you have paid and the interest and dividend adjustments. The Detailed Example includes these calculations.