Hamish Is a Day Trader Who Forms the Opinion That

question 15

Essay

Hamish is a day trader who forms the opinion that JB Hi Fi will fall from its current price of $18.50 to $18.He has $5000 to risk.The initial margin payment is 10%, ignoring brokerage costs.(a)What CFD order should Hamish place and what exposure does this achieve?
(b)Later that day, JB Hi Fi shares are trading at $18.Explain how Hamish can close-out his position and the profit or loss achieved.(c)Say instead the price increased to $19.Again explain how Hamish can close-out his position and the profit or loss achieved.

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Definitions:

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