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Bill

Not withstanding the gu'mint spiel, which is not technically correct, can you please tell me what you are borrowing to purchase.

IOW If you pay off "the loan", what do you end up with?

With margin lending shares, (which IS borrowing) once you pay off the loan you have full unencumbered title to the shares.

CFDs do not work this way, as it is only a contract between two parties to settle the difference between the entry price and the exit price. You cannot "pay off" such a contract.

There is a finance charge which reflects the cost of carry for the market maker to hedge his position, but this is not borrowing any more than covered calls are "renting shares".

Highlight of this fact is that you only pay a finance charge if you are long; you receive interest if you are short. So how can you be "borrowing if you are receiving interest?

The cost of carry operates the same way as options in that the person assumed to be carrying the shares, receives interest.

Once again, options have cost of carry priced in, but you pay/are paid up front. CFDs you pay/are paid as you go along.

Any more questions?

<blockquote data-quote="wayneL" data-source="post: 687250" data-attributes="member: 58">BillNot withstanding the gu&#039;mint spiel, which is not technically correct, can you please tell me what you are borrowing to purchase. IOW If you pay off &quot;the loan&quot;, what do you end up with?With margin lending shares, (which IS borrowing) once you pay off the loan you have full unencumbered title to the shares. CFDs do not work this way, as it is only a contract between two parties to settle the difference between the entry price and the exit price. You cannot &quot;pay off&quot; such a contract.There is a finance charge which reflects the cost of carry for the market maker to hedge his position, but this is not borrowing any more than covered calls are &quot;renting shares&quot;.Highlight of this fact is that you only pay a finance charge if you are long; you receive interest if you are short. So how can you be &quot;borrowing if you are receiving interest? <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite11" alt=":rolleyes:" title="Roll Eyes&nbsp; &nbsp; :rolleyes:" loading="lazy" data-shortname=":rolleyes:" />The cost of carry operates the same way as options in that the person assumed to be carrying the shares, receives interest.Once again, options have cost of carry priced in, but you pay/are paid up front. CFDs you pay/are paid as you go along.Any more questions?</blockquote>

[QUOTE="wayneL, post: 687250, member: 58"] Bill Not withstanding the gu'mint spiel, which is not technically correct, can you please tell me what you are borrowing to purchase. IOW If you pay off "the loan", what do you end up with? With margin lending shares, (which IS borrowing) once you pay off the loan you have full unencumbered title to the shares. CFDs do not work this way, as it is only a contract between two parties to settle the difference between the entry price and the exit price. You cannot "pay off" such a contract. There is a finance charge which reflects the cost of carry for the market maker to hedge his position, but this is not borrowing any more than covered calls are "renting shares". Highlight of this fact is that you only pay a finance charge if you are long; you receive interest if you are short. So how can you be "borrowing if you are receiving interest? :rolleyes: The cost of carry operates the same way as options in that the person assumed to be carrying the shares, receives interest. Once again, options have cost of carry priced in, but you pay/are paid up front. CFDs you pay/are paid as you go along. Any more questions? [/QUOTE]

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