ASSETS

• Corporate Shares
• Indices
• Currencies
• Gold & Silver
• Commodities
• ETFs
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• Interest Rates
• Trading examples
  Corporate Shares Indices Currencies Gold & Silver ETFs Commodities Bonds Interest Rates

Indices

Example#1. Buy NASDAQ-100 Index with Stocks (long position)

Opening position
On May 18th of 2009, the "Lyxor ETF NASDAQ 100" ETF shares are trading at 3.99 (bid) / 4.00 (ask) USD. This ETF tracks NASDAQ 100 Index and its shares are listed in Euronext Paris Stock Exchange. NASDAQ 100 Index for the same date and time is trading at 1,334 (bid) / 1,335 (ask) points.

An investor decides to open a long position on NASDAQ-100 Index, since he/she expects it to will rise in the near future. In order to do so, he decides to buy 10,000 shares of the "Lyxor ETF NASDAQ 100" ETF, an investment of 40,000 USD (10,000 shares x 4.0 USD per share).

Closing position
Imagine that on 28th July of 2009, NASDAQ-100 Index is trading at 1,667.5 (bid) / 1,668.5 (ask) points and "Lyxor ETF NASDAQ 100" ETF is trading at 5.00 (bid) / 5.01 (ask) USD per share. The ETF has risen exactly the same way and direction as the NASDAQ-100 Index (+25%).

Trade summary
 

Example#2. Buy DAX-30 Index with CFDs (long position)

One of the main advantages that negotiation with CFDs presents, is the possibility of operating with only a small percentage of total investment (i.e. trade notional).

Opening position
In early January, you want to open a long position in German Corporate Shares, since you think this market overall has a strong potential to go up in value. You want to invest 5,000 Euros but you are not sure which German Corporate Shares to pick.

DAX-30 Index is trading at 4,445 (bid) / 4,500 (ask) points. Instead of buying several German Corporate Shares, you decide to open a long position on CFDs with DAX-30 as the underlying asset. Thus, you need to open a long position on 22 Indices (99,000 ÷ 4,500 = 22), in order to do so, you deposit 4.950 €, which corresponds to 4,500€ x 22 x 5 %, which is the margin required to open the position.

Interest calculation
When you hold a long position on CFDs you pay interest and in case of a short position you receive interest.

The interest is calculated on a daily basis, by applying an interest rate on the notional of the trade for the period between open date and close date of the position. In this example, if the corresponding interest rate is 3 %, the interest payments per day would be 8.25 € (99,000 Euros x 3 % x 1/ 360).

Closing position
After 60 days, your estimations were correct, DAX-30 Index is trading at 5,500 (bid) / 5.505 (ask) points, making your CFDs worth 121,000 € (22 x 5,500€). You decide to close your position and sell your 22 CFDs, with DAX 30 Index as the underlying asset, at 5,500 points and pocket the profits [22 x (5,500-4,500)=22,000 Euros].

Trade summary 

Example#3. Sell IBEX-35 Index with CFDs (short position)

One of the main advantages that negotiation with CFDs presents, is the possibility of operating with short positions (short selling).

Opening position
In early January, you own a portfolio of Corporate Shares valued at 85,000 Euros, all listed on Spanish Stock Exchange. Your expectations are bearish, i.e. you expect a market fall that will affect negatively your portfolio value.

The IBEX-35 Index is trading at 8,500 (bid) 8,505 (ask) points. Your portfolio is valued at 85,000 Euros, in order to hedge it against a market fall, you decide to sell 10 Indices (85,000 ÷ 8,500 = 10) using CFDs, with IBEX 35 Index as the underlying asset. In order to open a position you need to deposit 4,250 €  which corresponds to 8,500 € x 10 contracts x 5 %, margin required for opening a position.

Interest calculation
With long positions, interest is charged in your account; In case of short positions, interest is credited on you your account, which is the case for this example.

The interest is calculated on a daily basis, by applying an interest rate on the notional of the trade for the period between open date and close date of the position.

In this example, if the corresponding interest rate was 1%, interests received per day would ascend to 2.36€ (85,000 Euros x 1 %/360).

Closing position
45 days later, your expectations were correct and the market has fallen, reducing the value of your portfolio to only 70,000 € (with a loss of 15,000 €). The IBEX 35 Index is trading at 6,495 (bid) / 6,500 (ask) points. You decide to close your position by buying 10 Indices at 6,500 points and pocket the gains.

Trade summary 

Example#4. Buy NASDAQ-100 Index with Futures (long position)

The Futures contract named "E-mini NASDAQ-100, Dec 2009" is listed on Chicago Futures Exchange and has NASDAQ-100 Index as the underlying asset. This product has the following characteristics:

Contract size: 20 Indices

Contract currency: USD

Required margin: 3,500 USD

Maintenance margin: 2,800 USD

Contract expiration: 18-12-2009

Opening position
On May 3rd, the NASDAQ-100 is trading at 1,425 points. The Futures contract "E-mini NASDAQ-100, Dec 2009" for the same date and time is trading at 1,400 (bid) / 1,450 (ask).

An investor expects NASDAQ 100 Index to rise; thus, decides to open a long position on May 3rd by buying the Futures contract at 1,450 USD (ask price). The trade notional (market exposure) is 29,000 USD (20 indices x 1,450 USD).

Closing position
The investor decides to keep his position until contract expiration. As expected, the NASDAQ-100 index went up and on December 18th is trading at 1,800 points. The "E-mini NASDAQ-100, Dec 2009" Futures contract for the same date and time is trading at 1.775 (bid) / 1,825 (ask). You decide to close your position at 1,775 (bid price).

Trade summary