S&P, AAPL on CFD

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1

Hi,
Can I ask what is the underlying mechanism for CFD trading on S&P ?

As far as I understood it, the US market breaks down like this:

9am-2.30pm GMT - PreMarket
2.30pm-9pm GMT - Normal market
9pm-1am GMT PostMarket

As far as I understood only institutional investors can access pre and post markets.

WE instead can bet on those markets using a CFD product. e.g. I can bet on AAPL from 9am until 1am GMT.

Questions:

  • CFD is just a contract right ? I don’t own AAPL stocks. So I’m just betting on the value of the stock correct ? My bet or the value of my bet won’t change its value. What changes it, it’s the big institutional investors buying/selling real shares in the pre/post market… correct ?

  • If the above is a YES, how is the CFD S&P value calculated overnight ? S&P CFD is open between 11pm and until 9.14pm of the day after…meaning if AAPL has stopped trading at 1am… where is the S&P value between 1am-9am GMT coming from ?

2

@dropbrick Extended hours trading is becoming ever more accessible, even to retail investors.

Qs:

  1. Yes, it means a contract for difference. You’re speculating on the changes in the price of the underlying asset. As for changes in the price of the underlying instrument - yes, it’s generally affected only by purchasing the actual underlying security (real Apple equity). However, it’s possible that CFDs affect the price since a large enough CFD trade with significant leverage might make the broker decide to hedge their exposure by purchasing the actual shares - thus affecting the underlying market for that CFD.
  2. It’s based on something that works almost 24/5 - index futures. In S&P 500’s case, it’s based on the CME’s “e-mini S&P 500” futures:
    https://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500.html
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