"Price Adjustments" charge on short spread bets

eoincasey

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As a very new financial spread bettor with CMC Markets, I was surpised to see that dividends even apply to these types of derivatives. I'd heard they did with CFDs alright but not spread betting. Anyway, I had a short on the Dow at €1/pt. Position went against me and I got stopped out a week later with a €200 loss.... but as I was looking through the week-long history of the trade, I notice this 'price adjustment' charge every week day except one, totalling something like €15. IIRC, the CMC agent says it's to do with Dow companies declaring a dividend. But how are these charges worked out? It seems strange that an index with 30 companies was declaring a dividend nearly every day. If it was the S&P 500 I had a short on, could I expect even heftier dividend hits or does it not work like this? Is there perhaps an independent website you can check to verify dividend amounts & when they are declared? :(
 
eoincasey

there are only 30 stocks in the dow so the charge will not have been this (although there may be one or two).

all SB companies have overnight financing charges for rolling bets. Not sure what CMCs rates are but if it is based on the US Base rate plus/minus 2.5% then for a short position you would be 'paid'

dow price X stake X (base rate-2.5)/36000 each day... because the number becomes negative (as rates are currently so low) this means that you will not be 'paid' but will have to pay, even for a short position.

so if dow was around 13000

you would be charged 13000x1x(0.25-2.5)/36000 = £0.80 per day approximately... over a weekend you would get charged three times this amount.

simon
 
Hi Simon,

is the charge you're referring to perhaps the 'Bet Financing Cost' (as CMC describe it)? This amounted to €0.71/day for this particular trade. But this is different to the 'Price Adjustment' charge I got hit with on various days. Please see attachment.....thanks.
 

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  • CMC Price Adj.png
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eoincasey

then i am wrong and it is divvy adjustments. following hacks threads you get ex-div dates of 2 on 5th, 2 on 6th, and 1 on 10th dec
they will have charged u the day before these .. so 4th, 5th and 9th (maybe they had one of the ones on the 6th down for the 7th)

simon
 
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I've worked out the dividend calculations. They all seem correct except for the one for the 6th (1.63) - I don't know which company this is for as no company is listed as ex-div on 7th according to the dividend dot com website. You might want to ask CMC about this one.
 
I've worked out the dividend calculations. They all seem correct except for the one for the 6th (1.63) - I don't know which company this is for as no company is listed as ex-div on 7th according to the dividend dot com website. You might want to ask CMC about this one.

which company went ex-div for the €3.12 price adjustment on the 4th? I just cant see it on the dividenddotcom site.
 
which company went ex-div for the €3.12 price adjustment on the 4th? I just cant see it on the dividenddotcom site.

Bank of America and Wal-Mart both went ex-div on 5th. Adjustments are made the day before.
 
Bank of America and Wal-Mart both went ex-div on 5th. Adjustments are made the day before.

ok, so that's the annual combined div of 1.63 / 0.130216081, multiplied by my stake, which equals 12.51. Hmmm, what am i doing wrong?
 
ok, so that's the annual combined div of 1.63 / 0.130216081, multiplied by my stake, which equals 12.51. Hmmm, what am i doing wrong?

1.63 * 0.130216081 = 0.21225

So total dividends per share is around $0.21, but like I said before, we don't know which company this is for.
 
I had a load of dividends paid to me on GKFX from a long WS30:

4 December at 3.129
5 December at 9.292
6 December at 1.632

I closed the trade Friday evening but got another dividend on 9 December at 11:38pm at 1.014
 
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