CFDs vs. buying stocks on margin/shortable stocks/Single Stock Futures

[genbie]

Hi,

What are the relative merits of trading CFDs over buying shares on margin or shorting them? And how do Single Stock Futures (SSFs) compare to the lot? Are there any substantial margin/tax/fees differences?

I know buying stocks on margin or shorting them and SSFs always mean dealing with the real market, whereas many CFD providers may actually act as market makers, correct? For those providers that charge a commission for CFDs but allow direct access, would you prefer CFDs over buying stocks on margin or SSFs if you did not aim to have ownership of the underlying and were merely speculating on price changes? And in which instances would you think shorting stocks is better than CFDs?

Thanks in advance.

 

[Racer]

CFDs.. Capital gains.. but can offset losses
Spreadbetting.. none and can't offset losses either
CFDs, pay interest on longs, get interest on shorts. pay divs if short, get a part of it if long
Spreadbetting, no interest, well not that you directly see.. but the spread is wider! Different months quoted different prices based on spread and time period (interest in other words)
Direct access, be the MM
Spreadbetting take what they give you

 

[Racer]

And in which instances would you think shorting stocks is better than CFDs?

What do you mean by this?
You can short and long using CFDs.. see previous post

 

[genbie]

What do you mean by this?
You can short and long using CFDs.. see previous post

Hi Racer,

Thanks for your reply. I meant comparing CFDs with shorting stocks with a direct access broker like interactive brokers for example.

 

[Racer]

I use direct access CFDs and have done for years, haven't used any other sort

 

[Tuffty]

IB short list for UK market is quite short (only FTSE100) plus there are some funny rules re you can't be short before a dividend payments.

A question for Racer(or anyone). What commission do you pay on CFD's? The cheapest I can find pre-negotiation seems to be 0.15% per deal (IG Index direct access). Should I be able to do better than that? (Etrade do £9.95 fixed price but it's only for the FTSE100).

 

[Racer]

Depends on how much you trade really. Can't comment on mine as it is negotiated, sorry.

 

[Racer]

IB short list for UK market is quite short (only FTSE100) plus there are some funny rules re you can't be short before a dividend payments.

That's a bit useless!
I have been short on some shares and paid the divi.. and ended up much better off cos the price gapped lower than the div.. so if I had closed the short and opened it again (i.e., not paid the div) then I would have been much worse off and paid two lots of commission on top!