Comparison of CFD and Warrants (Part 2 of 3)

In this second part, I shall discussthe pros and cons of using either structured warrants or CFD's.
If you notice, I said Warrants are close to, but not a zero sum game. This is because DMM's also earn from the bid/offer spread.
Pros	Cons
Unlimited Gains, Limited Losses	At the mercy of Mr. Market and his wife, Mrs. Designated Market Maker (DMM)
No Finance Charges	Market Makers can, and frequently do, manipulate warrant pricing
Traded just like any security	Has an expiry date, and time value decays as expiry looms
No Margin Calls	Lose immediately due to bid/offer spread (which can be high in times of high Volatility)
	Close, but not exactly a zero sum game- i.e. DMM wins, you lose, DMM lose, you win
CFD
Pros	Cons
Generally lower commissions than normal brokerage firms	Unlimited Losses#
Your incentives and Firm's incentives are the same i.e. Not a zero sum game- you win, they win too	Margin Calls if you are underfunded
At the mercy of Mr. Market only	Immediate closing out of open positions if funds are insufficient
	Finance Charges can add up
	Unlikely to have manipulation(or less effective) of the underlying
#Unlimited Losses occur when your stock price drops to a point where you lose more than your capital (e.g. I buy $10000 worth of SIA, my margin deposit is 10%, or $1000, and SIA drops to, say, $6000. I lose $4000 on this position, and since I originally borrowed $9000, I lose my initial $1000 and another $3000 I borrowed from firm.) Easily overcome with a STOP LOSS
Next up will be a comparison between CFD providing firms.