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 £20 per point.
You have now sold the equivalent of 2000 Shares with a value of £3,180.
Your margin requirement with RBS Spread Trading for ABC Corp is 5% therefore £159 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 £159 initial margin.
Two days later you see that ABC Corp has risen to 1.79/1.80.
Therefore you choose to buy at 1.80 and realise your loss.
You sold at 1.59 and bought at 1.80 which means ABC Corp rose by 21 points.
21 x £20 = £420 loss.
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%
£3,180 x 2.5% = £79.50 ÷ 365 = 22p for every night you hold the position open.
As you have held the position open for 2 nights, a total of 44p will be paid to you.
This is taken away from your loss. This leaves a total loss of £419.56
* RBS Spread Trading reserves the right to amend this rate with prior notice
