When the underlying stock pays a dividend, CFD traders will either receive or pay a dividend adjustment based on their position (long or short):
Long Position:
If you hold a long (buy) position in a stock CFD and the underlying stock pays a dividend, you will receive the corresponding dividend adjustment.
Short Position:
If you hold a short (sell) position in a stock CFD and the underlying stock pays a dividend, you will need to pay the corresponding dividend adjustment.
Dividend adjustments are typically calculated based on the dividend payment amount of the underlying stock and will directly impact your trading account balance.
Example of Dividend Adjustment:
Suppose you hold a CFD position on AAPL stock, and the underlying stock is about to pay a dividend. Here is an example of the dividend adjustment calculation for both long and short positions:
Long Position:
Assume the current AAPL stock price is $150, and you hold a long (buy) position of 100 shares of AAPL CFD, with a dividend of $1.50 per share.
Dividend Adjustment Calculation:
Position Size * Long Dividend Amount
100 shares * $1.50 = $150
Therefore, on the ex-dividend date, your trading account will directly receive a dividend of $150, which will be reflected in your account balance and marked as "Dividend."
Short Position:
Assume the current AAPL stock price is $150, and you hold a short (sell) position of 100 shares of AAPL CFD, with a dividend of $1.50 per share.
Dividend Adjustment Calculation:
Position Size * Short Dividend Amount
100 shares * $1.50 = $150
Therefore, on the ex-dividend date, your trading account will be debited $150 for the dividend, and this amount will be reflected in your account balance and marked as "Dividend."
You can click this link for more information:
https://ebc-fin.net/dividend.