Discussion in 'Options' started by nravo, Oct 22, 2007.
Is there really any substantial difference between CFDs and options? Benefits?
Are you talking about contracts for difference? If so then yes there is big difference, they're like futures for stocks that have no expiry date or contract size. they offer more leverage.
I thought they were a UK only thing.
Ah, ok. Makes more sense now. They are in Australia, too, and about to move to an exchange rather than OTC. Could be the next big thing in the states?
If you want to have a broker who plays constantly against you, then it will certainly a big thing. But if you manage to make some money in an active way, like by entering more than one order per day (more like 20 or 100 orders), the marketmaker will requote you after a while at a price away from the reality. If you have CMC in mind, they won't probably requote you from the start, like GCI does.
But it is definetely worth a try to make a quick buck or two (with CMC)
CFDs are illegal in the US.
I don't quite see how CFDs can be listed on an exchange, since they are OTC products by definition/design!?
I think they are going up on the ASX in Sydney soon. Google it.
I wonder why they are illegal?
Not an expert, but it has something to do with betting...
Must be because they're considered as gambling.
Either the US gov is too strict on its policy, or the UK is too lenient... probably the former. In the UK gambling proceeds aren't subject to capital gains tax, therefore, tons of companies over here set up as spreadbetting and binarybet providers on everything from stocks to exotic options... CFD's seem to be the respectable sibling of the whole endeavor... they're pretty mainstream.
Indeed they are. http://www.asx.com.au/investor/cfds/
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