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Using CFD to get risk free dividends?
pharoah88
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07-Jul-2010 09:36     
 
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Are you sure the CFD commissions is Only 0.15% (and nOt 0.35% ?) ?

Is 0.15% applicable to just first 5 trades or Only during the prOmOtiOn  periOd ?

WHiCH  brOker is that ?

Better dOuble confirm with your brOker.



fartist      ( Date: 06-Jul-2010 14:31) Posted:

I've checked with my broker that when you short, they don't charge you interest as you are selling the shares.

Commission wise is 0.15% of the total shares amount.

Thank you once again :)



Laulan      ( Date: 06-Jul-2010 11:26) Posted:

Yes, you can get free dividends provided you buy back your CFD before XD.  If you bought back after xd, then your CFD acct will be debited the dividend amount.

So there is actually no benefit at all except for the hedging against wild swings in stock prices.  You will also incur additional expenses such as margin and sell buy spreads.
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fartist
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06-Jul-2010 20:05     
 
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They pay dividends to the buyers?

I didn't know that.
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pharoah88
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06-Jul-2010 18:23     
 
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iF  CFD  is  sO  KiND  tO  TRADERS / iNVESTORS,

there  wOuld  be   any  MARKET  MAKERS.



fartist      ( Date: 06-Jul-2010 16:52) Posted:

Haha, thanks for sharing. It was just an outta blue ponder. Maybe i ask him see what he says, heh.

Laulan      ( Date: 06-Jul-2010 15:40) Posted:

Short shares: Must cover same day or borrow and pay 40% margin for borrowing.

Short CFD = Sell CFD: Pay commission plus put margin (amount depending on your CFD trading limits)

Buy shares: Pay 100 percent lose your own bank interests.

Buy CFD = Pay for the margin required, usually about 40% plus put up margin.

Brokers sure-win type, no two ways about it. 

Hope you get a good broker, but initially he will be good, later on you will curse and swear in your heart. Therefore lay your terms.  LOL 
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pharoah88
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06-Jul-2010 18:21     
 
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PRiMARY  iSSUE  here iS

When shORting CFD, one Pays Dividend to Market Maker

and  DON'T  earn  Dividend frOm Market Maker.

Of   cOurse,  transactiOn  cOsts  is  the  secOndary iSSUE.



fartist      ( Date: 06-Jul-2010 14:31) Posted:

I've checked with my broker that when you short, they don't charge you interest as you are selling the shares.

Commission wise is 0.15% of the total shares amount.

Thank you once again :)



Laulan      ( Date: 06-Jul-2010 11:26) Posted:

Yes, you can get free dividends provided you buy back your CFD before XD.  If you bought back after xd, then your CFD acct will be debited the dividend amount.

So there is actually no benefit at all except for the hedging against wild swings in stock prices.  You will also incur additional expenses such as margin and sell buy spreads.
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fartist
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06-Jul-2010 16:52     
 
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 Alert Admin 		Haha, thanks for sharing. It was just an outta blue ponder. Maybe i ask him see what he says, heh.

Laulan      ( Date: 06-Jul-2010 15:40) Posted:

Short shares: Must cover same day or borrow and pay 40% margin for borrowing.

Short CFD = Sell CFD: Pay commission plus put margin (amount depending on your CFD trading limits)

Buy shares: Pay 100 percent lose your own bank interests.

Buy CFD = Pay for the margin required, usually about 40% plus put up margin.

Brokers sure-win type, no two ways about it. 

Hope you get a good broker, but initially he will be good, later on you will curse and swear in your heart. Therefore lay your terms.  LOL 



fartist      ( Date: 06-Jul-2010 14:31) Posted:

I've checked with my broker that when you short, they don't charge you interest as you are selling the shares.

Commission wise is 0.15% of the total shares amount.

Thank you once again :)
 Useful To Me  Not Useful To Me


Laulan
Master
06-Jul-2010 15:40     
 
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Short shares: Must cover same day or borrow and pay 40% margin for borrowing.

Short CFD = Sell CFD: Pay commission plus put margin (amount depending on your CFD trading limits)

Buy shares: Pay 100 percent lose your own bank interests.

Buy CFD = Pay for the margin required, usually about 40% plus put up margin.

Brokers sure-win type, no two ways about it. 

Hope you get a good broker, but initially he will be good, later on you will curse and swear in your heart. Therefore lay your terms.  LOL 



fartist      ( Date: 06-Jul-2010 14:31) Posted:

I've checked with my broker that when you short, they don't charge you interest as you are selling the shares.

Commission wise is 0.15% of the total shares amount.

Thank you once again :)



Laulan      ( Date: 06-Jul-2010 11:26) Posted:

Yes, you can get free dividends provided you buy back your CFD before XD.  If you bought back after xd, then your CFD acct will be debited the dividend amount.

So there is actually no benefit at all except for the hedging against wild swings in stock prices.  You will also incur additional expenses such as margin and sell buy spreads.
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fartist
Member
06-Jul-2010 14:31     
 
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I've checked with my broker that when you short, they don't charge you interest as you are selling the shares.

Commission wise is 0.15% of the total shares amount.

Thank you once again :)



Laulan      ( Date: 06-Jul-2010 11:26) Posted:

Yes, you can get free dividends provided you buy back your CFD before XD.  If you bought back after xd, then your CFD acct will be debited the dividend amount.

So there is actually no benefit at all except for the hedging against wild swings in stock prices.  You will also incur additional expenses such as margin and sell buy spreads.



fartist      ( Date: 06-Jul-2010 10:52) Posted:



Hi guys, i was wondering if it is possible to get risk free dividends using CFD to hedge our share.

For example ABC share cost 10 dollars. And pays out 5% dividends annually.

So we buy 1 lot of it, and use CFD to short 1 lot of it.

After 1 year, we can collect our dividends without any risk of capital loss?

Is this possible? Many thanks.
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Laulan
Master
06-Jul-2010 11:26     
 
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Yes, you can get free dividends provided you buy back your CFD before XD.  If you bought back after xd, then your CFD acct will be debited the dividend amount.

So there is actually no benefit at all except for the hedging against wild swings in stock prices.  You will also incur additional expenses such as margin and sell buy spreads.



fartist      ( Date: 06-Jul-2010 10:52) Posted:



Hi guys, i was wondering if it is possible to get risk free dividends using CFD to hedge our share.

For example ABC share cost 10 dollars. And pays out 5% dividends annually.

So we buy 1 lot of it, and use CFD to short 1 lot of it.

After 1 year, we can collect our dividends without any risk of capital loss?

Is this possible? Many thanks.
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belgeran
Veteran
06-Jul-2010 11:11     
 
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theorectically, that will work, as a loss on the holding lot is covered by the shorted lot..

however, if you calculate your transaction costs, maintenance cost of the CFD lots.. u don't turn a profit and may end up incurring losses... unless you say u can maintain a CFD short with no charges, then yea.. it will work ;)

also note that CFDs has selected stocks for shorting only..

lastly, u can attempt to short a stock on the day before XD... and buy it back on XD day.. that would most likely reduce your risks of trying to earn from the dividends.. if that stock can be shorted and your position can be held (i'm under the understanding they don't allow positions to be held if there are corporate actions like dividends, entitlements etc)

please correct if i'm wrong.. don't own a CFD account myself ;)
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fartist
Member
06-Jul-2010 10:52     
 
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Hi guys, i was wondering if it is possible to get risk free dividends using CFD to hedge our share.

For example ABC share cost 10 dollars. And pays out 5% dividends annually.

So we buy 1 lot of it, and use CFD to short 1 lot of it.

After 1 year, we can collect our dividends without any risk of capital loss?

Is this possible? Many thanks.
 Useful To Me  Not Useful To Me
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