Comparison with
other derivatives
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CFDs as fairly as the direct investment in options and
futures!!!
Options and
futures are standardised contracts which are traded in a
futures exchange, e.g., Eurex. Futures and CFDs are similar
to themselves in many things. The big advantage does not lie
here, nevertheless, with the CFD there on the one hand you
do not need so much capital around a contract to be able to
act and, on the other hand, you can trade smaller contracts.
With both is to be deposited a security (Margin) which is
substantially lower with the CFD and the investor with trade
of future contracts as a rule has always a clearly bigger
risk and a clearly bigger capital expenditure than with the
CFD.
Therefore,
futures are left to rather professional investors. As
opposed to these both product kinds options contain a right,
namely on the delivery or the sales of a base value. Onto
the prize education by options flow in clearly more and more
complicated factors than in those of a CFDs, for example,
the expected variation width of the base value, the
volatility etc.
By options the
investor must consider more factors than with the CFD, for
example, the expected variation width of the base value, the
volatility with the prize education. You must say quite
clearly that investors which options act, trade products of
those they nothing understand. Now with the CFD the investor
receives a product he understands in a ratio of 1:1.
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Simply..., because without optional character
CFDs offer a
lever force without owning optional character (like
Warrants). Nobody has to reck one’s brains about the right
strike price or worry about a possible depreciation on the
time axis to himself. It behaves in such a way, as if you
buy the share on the stock exchange, indeed, with one fast
lever effect.
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In what do the advantages and disadvantages of a CFDs lie
in comparison to the option light?
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In what do the advantages and disadvantages lie in
comparison to knock-out paper?
Not only with
reach to the knock-out threshold the paper nothing more is
worth. It is often however, thus! A knock-out threshold was
hardly reached once it goes again strongly in the before
positioned direction. Often it is supposed here, that the
emitter picks off this knock-out threshold to protect your
profits.
Another
disadvantage with option notes and also knock-outs is that
the prices are set from a Marketmaker and he often changes
them or extends the spread.
Who trades CFDs,
trades always for LIVE prices. Nevertheless, the investor
has to chose a broker who offers LIVE prices.
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Profit to 100% from the course movements
Derivatives are
financial products whose prices are derived from the price
of other products. In case of the CFD is the “other
product“the base value and the derivation corresponds to a
hundred percent dependence, or better coverage. A CFD takes
down always on the precisely same course like his base value
(e.g., share, index, foreign exchange, etc.) to which he
refers and reproduces his course changes congruentially. The
CFD-Trader profits logically to 100% in the course change of
the underlying base value.
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Honest prices
A big advantage
of CFDs is that the course is identical with the official
stock market course of the basic base value. In contrast to
other derivatives, as for example Warrants, Turbos or
certificates which are emitted by finance service providers.
These finance enterprises act as so-called “Market Maker”
and influence the course of the derivatives which they
spend. CFDs are clear derivatives whose courses are not
influenced by so-called “Market Maker”.
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