Buying Coffee Contract
A Coffee contract (KC) + (Month Code) + (Year) consist of 50,000lbs of Coffee and will be quoted with a spread of 0.30 cents, and a minimum quote fluctuation of 0.05 cents ($0.0005), , with a margin requirement $ 2000 per contract
A client believes that Coffee is undersupplied and is therefore due to rise in price in the near future. To exploit the situation the client intends to BUY Coffee CFD's.
KCZ6 is quoted at 113.75/05 (US cents). The client buys 4 lots at 114.05. This requires a total deposit of $8,000. The client requires a minimum deposit of $2,000 for each position.
KCZ6 prices, as predicted, rise to 114.45/75. The client reacts to the news by closing his position and therefore SELLS 4 lots of KCZ6 at 114.45. Therefore the client has made 0.40 cents.
If the client BOUGHT at 114.05 and SOLD back at 114.45, then the 0.40 profit will be represented in US Dollars as: (50,000*$1.1445) - (50,000*$1.1405) =$57,225 -$57,025 = $200 per contract. This results in a total profit of $800 ($200* 4 contracts).
The client's gross account balance is now $8,800 ($8,000 original account balance + $800 trading profit)
| 1. Buy 4 lots @114.05 - Sell 4 lots @114.45 |
+ 0.40 cents profit |
| 2. (50,000*$1.1445) - (50,000*$1.1405) =$57,225 -$57,025 |
+ $200 per contract |
3. $200* (No. of contracts 4)
|
+ $800 Gross Profit |
| *Commission charges are NOT included in the above calculations |
|
CFD's based on Futures contracts and quoted 'with expiry' are not subject to further daily interest credits/charges.
