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LONMIN CFD

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Super Contributor
@simon So is Margin a function of Volatility or RISK+Volatility?
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Super Contributor
@simon,firstly that was a joke to piss you off a bit, but I quickly qualified myself.
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Valued Contributor
or is risk = volatility ?
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Super Contributor
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Valued Contributor
preston, you a troll an I have a plane to catch ..
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Super Contributor
@skaap, Are you intimdated with the CFA qualification , or does it outrank , "your local is lekker, MBA qualification".
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Super Contributor
@simon, fly MTA, looking for a soft landing.
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Not applicable
right, was going to let this go, but can't let an idiotic comment go unchecked. So, for the supposed CFA educated (which I think you need to ask for your money back - because this stuff is on page one - in fact it is the stuff they expect you to know before you even register for the course) ... let's take a page out of the investing for dummies text book shall we? (you can get this on Wikipedia or Investopedia if you want to second guess me) Institutions offering CFD's hedge themselves in 2 ways - 1) they offer direct market access, taking a physical position against your CFD position, to my knowledge all South African banks do this OR 2) they act as market maker, taking your order onto their own book and coming up with various hedging strategies, typically netting your order off against a counter short / long trade - or more commonly netting off the portfolio. This is where the IG's of the world fit in, hence Simon (and my) previous comments over the stability of these guys (anyone remember DealStream??). Now, to correct the idiotic comments - they do not (and let me repeat this) do not use delta. Delta is not a thing. Delta is mathematical ratio that compares the price of the underlying to the price of the derivative. In CFD's delta is one (the movement on your margin account as the underlying moves does not fit the definition) . Saying they use Delta is like saying Dale Steyn uses his batting average to deliver an in-swinging yorker.
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Super Contributor
@Skaap, Section 18.4 Page 380-386. Title: Options, Futures and Other Derivative, 8th Edition, Author John C Hull . Please go and understand the impact of Delta. Maybe the word "Delta" is not specifically used for CFD's as it is used for warrants, options
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Valued Contributor
delta has nothing to do with hedging a CFD, preston your initial point (or whatever it was) was totally flawed ..
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Super Contributor
@simon, now, who is meeting the definition of being a "troll"? Good night Mr Troll
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Super Contributor
Preston, please explain in detail how the delta will be used to hedge, you obviously have an idea of how the banks do this and I would be keen to hear the detailed explanation and not only the quotes of a textbook that I don't even have?
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Super Contributor
Preston, please explain in detail how the delta will be used to hedge, you obviously have an idea of how the banks do this and I would be keen to hear the detailed explanation and not only the quotes of a textbook that I don't even have?
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