Identifier: C5T1L1 · Revision: 2026-10-26 · Classification: restricted

Decision and objectives

The practical task is to explain CFD cash exposure without claiming underlying ownership. Make the decision reproducible: name the exposure, time horizon, cash requirement and comparison baseline before selecting a product.

Objectives: Explain CFD cash exposure without claiming underlying ownership; Calculate linear long and short outcomes in declared units; Identify counterparty and financing differences from direct holdings.

Prerequisite: C4T8L5; completed Classes 1–4 and the Stock Market School foundation or Forex School foundation. Every example is hypothetical. Prices, dates, rates, fees, contract factors, policies and tax schedules are supplied teaching inputs, not current offers or legal parameters. No live account is needed.

Mechanics

A contract for difference (CFD) is a bilateral derivative whose cash result follows the change in a reference price under the provider agreement. A long receives a favorable upward difference and pays an unfavorable downward one; a short reverses the sign. The investor does not receive the reference share's voting rights or a direct title to the commodity. Distribution adjustments are contractual cash entries, not evidence of shareholder ownership.

The provider supplies the contract and can quote prices, finance exposure and apply closeout terms. Whether it hedges externally does not give the customer a direct exchange claim. An exchange future has standardized clearing and expiry obligations; direct ownership has custody and principal purchase obligations. These distinctions survive even when all three produce similar market sensitivity.

Price and return drivers

Notional = units × reference price × cash factor. Gross closed result = signed units × factor × (close fill − open fill). Deposited margin is pledged cash, not the purchase price. Financing normally applies to a stated notional base over actual charged days; it can accumulate while the reference price is unchanged.

Worked case

Hypothetical long 200 units, factor TRY 1 per price unit, entry 100. Notional TRY 20,000. Supplied initial cash collateral TRY 4,000 is not full principal ownership. At closing prices 90, 100 and 110, gross results are −TRY 2,000, zero and +TRY 2,000. Total round-trip charges TRY 40 and five-day funding on TRY 20,000 at 36% actual/360 cost TRY 100, producing net −TRY 2,140, −TRY 140 and +TRY 1,860 before tax. These are completed-trade outcomes, not guaranteed pre-close values or an actual approved customer offer.

Adverse case

A short of 200 units closed at 130 loses TRY 6,000 gross, already larger than the hypothetical TRY 4,000 deposit. Net loss after the same costs is TRY 6,140 before any applicable protection. A specific legally effective customer loss protection can alter the collectable debit; it does not change the raw market arithmetic or supply guaranteed execution. Never transfer a foreign venue's protection to a Turkish account by analogy.

Practical use

The verified SPK guide places OTC CFDs under the Turkish leveraged-trading framework. Confirm legal entity, precise activity authority, customer classification, contract scope, reference-price method, financing and loss provisions through the domestic permitted route. A foreign website login or payment facility is not equivalent authorization. Reconcile units, collateral, adjustments and withdrawable cash from the statement.

Use permitted domestic access routes and the actual instrument documents. Verify intermediary authority, investor eligibility, order/redemption terms, settlement, custody and executable size before implementation. Reconcile spread and commissions, funding, collateral, custody, product expenses, conversion and exit charges; an amount already embedded in a fill or fund unit price is not deducted again. A published mark or product description does not promise an executable price or liquidity.

Tax is excluded unless a numerical schedule is expressly supplied as hypothetical. For actual rules record income year, residence and individual/corporate status, instrument and acquisition/contract dates, taxable event and rule effective date. The GIB investment-income guide, checked 2026-10-26, covers 2025 individual income; its 2026 publication date alone cannot settle a 2026 liability.

Decision boundaries

A CFD can only be compared after its provider and cash model are understood. It is unsuitable as a substitute for shareholder rights or as a supposedly unfinanced long-term holding. Decline when ownership is the objective, when authorization is unverified or when required funding and protections cannot be established.

Practice and references

Exercise: hypothetical short 80 units, factor TRY 2, entry 50, exit 47; total charges and funding TRY 90. Solution: gross = −80 × 2 × (47 − 50) = TRY 480; net TRY 390 before tax. Reference notional was 80 × 2 × 50 = TRY 8,000. No underlying security has been returned or sold by the customer merely because this CFD closed.

Takeaway: Identify counterparty and financing differences from direct holdings with the cash dates, costs and remaining risks stated.

Product card: domestic-cfd. Formula: CFD closed linear result. Glossary: CFD, Cash factor. Next lesson: C5T1L2. Topic test.

Sources checked 2026-10-26:

Shared reference guide