Often some investors can find themselves in the awkward position of having built up a holding in a share or a group of shares, which contains a significant amount of capital gains.
Selling could well create a considerable Capital Gains Tax bill.
Because of the CGT implication selling is sometimes not the best option for your circumstances. However, not selling the shares could mean that the value they have gained might be unnecessarily lost.
CFDs offer a viable solution to this situation. They can be used as a perfect hedge by creating a SHORT position against the full value of the holding (or portfolio) with a small deposit.
The advantage of using CFDs in this way is that you can essentially freeze the gain achieved at a predetermined point so that any downward movement will profit the CFD by the exact amount which is lost by the share.
Conversely any upward movement will profit the share but the CFD will lose the exact amount gained by the share.
Working alongside your advisor at Simple Investments a solution can be achieved to even the most complex hedge requirement.
