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Dividend calculation on CFD'S

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alleycat
Contributor
Please advise how dividends due to be paid out are calculated if one is holding a CFD on the underlying. I know that if long the amount will be credited to your account and if short debited, but is the calculation done on the margin or on the exposure and how is it calculated? Many thanks.
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11 REPLIES 11
Not applicable
pretty sure it's on the exposure
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Not applicable
if you buy 100 shares of ABC, you technically own the 100 shares of ABC, in other words you receive dividends for the 100 shares of ABC.
A CFD is simply you paying a small portion of the total to own the total / 100 shares in ABC.
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alleycat
Contributor
Right. Found out from the trading desk. The dividend multiplied by the number of contracts held will be the amount credited if long or debited if short on your CFD trade. Nothing to do with exposure or margin.
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SimonPB
Valued Contributor
number of contracts held is your exposure ..
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alleycat
Contributor
Thanks Simon. What I meant is that the calculation is done on the number of contracts and not the number of shares exposed to.
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prancing_horse
Super Contributor
Is it not the same thing? SSF's 1 contract equals 100 shares
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SimonPB
Valued Contributor
well on a CFD 1 contract = 1 share ..
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alleycat
Contributor
Just as an example. Aspen has declared a dividend of R1.05. If you held 400 CFD contracts with an exposure of say 35,000 shares, the calculation would be 400 x R1.05 = R420 which would then be credited to your account if you were long or debited if short. I am not sure if the same applies to SSF's
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suki
Super Contributor
AlleyCat, did we by anychance meet at OST CFD course and talked a lot about Shoprite?
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Not applicable
Your not exposed to 35,000 "shares", its "Rand" 35,000 - as in R 88 * 400 shares = Total exposure of R 35,000. I.e. if the share tanked today and become worthless you owe Standard Bank R 35,000 - margin.
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alleycat
Contributor
Hi Suki. No we have never met before and because I live in the rural area of Tzaneen it very difficult to attend the courses offered by OST. Thanks BC01. Learning all the time and need the input from a forum as per my statement above. Thanks guys.
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