Hedging your portfolio by shorting with CFDs

[Zergui]

I’d think hedging that would make most sense is rather to always hold some SPY puts, and use the extra liquidity on a downturn to buy stuff on discount.

CFDs could achieve the same thing, but certainly not on T212. Fees here are prohibitive, and a CFD position here only makes sense for very short lived positions.

Cheapest CFDs around will be IB, but then I’d choose puts over CFDs.

Edit: from an other post some time ago, I had looked at different provider’s fees

@Zergui

comparative stock position between a few CFD brokers, and found the following:

• 1:5 stock CFD on T212 had 0.1% per day fee on a long position, or 36.5% per year!
• 1:5 stock CFD on Plus500 had a 0.0442% per day (long), or 16.1% per year
• 1:5 stock CFD on eToro had about 0.018% per day (long), or a 6.5% per year
  (and before anyone says the calculation is wrong, no, those fees are not compounded!)

Keep in mind these fees are applied on the total leveraged position , not your own initial margin requirement. Holding a stock CFD on T212 over any extended period of time looks like pure madness, and would reduce a strong outperformance to almost nothing; it is a suitable position only for very short lived bet on a given catalyst.