ABC Corp is trading at 1.59/1.60 and you think the price is going to fall in value.
You decide to place a sell bet so you sell ABC Corp at 1.59.
You decide to trade £50 per point.
You have now sold the equivalent of 5,000 Shares with a value of £7,950.
Your margin requirement with RBS Spread Trading for ABC Corp is 5% therefore £397.50 will be allocated from your account against this trade as initial margin. Remember if the share price moves against you, it is possible to lose more than this £397.50 initial margin.
Two days later you see that ABC Corp has fallen to 1.38/1.39.
Therefore you choose to buy at 1.39 and realise your profit.
You sold at 1.59 and bought at 1.39 which means ABC Corp fell by 20 points. 20 x £50 = £1,000 revenue.
You held the position for two days and because you were short (so were effectively loaning us money) you are credited an amount calculated by using the LIBOR rate -2.5%*. The LIBOR rate for this example is 5%. The total rate of 2.5% is then multiplied by your total market exposure and divided by 365 days in the year.
5% - 2.5% = 2.5%
£7,950 x 2.5% = £198.75 ÷ 365 = 54p for every night you hold the position open.
As you have held the position open for 2 nights, a total of £1.08 will be paid to you.
This financing payment is added to your profit. This gives you a total profit of £1,001.08.
* RBS Spread Trading Index reserves the right to amend this rate with prior notice
