Cheaper financing than IB's margin rates?
- Thread starter HockeyPlayer
- Start date
I'm with Dash Prime/Apex and highly recommend them. @Robert Morse is a long-time community member and a wealth of information so I don't think you could go wrong with him and Lightspeed. With the purchase of OptionsXpress and soon TD, Schwab actually isn't too bad if you don't need an API and don't have the capital to go the prime route. My 401K is with them, nothing special but nothing crazy either and they have knowledgeable, real humans who run the company.
Haven't used TOS, haven't seen anything particularly bad about them either.
I appreciate everyone's help. I sold the June 18 SPX 2000/4000 box this morning for 1997, which I calculated as borrowing $200k for 3 months at .59% annually. The mid as shown in TWS bounces around at least 4 points but I think 1997 is pretty close.
Several people have asked about how to profit from very cheap borrowing. Obviously, you aren't going to find a scalable, risk free return much above 1%.
That said, I'm considering a variety of uses, in decreasing order of safety:
- Ally is paying 1.5% on savings with a possible deposit bonus
- Providing capital to local private hard money lenders, I believe I can get 6% and scale to at least a few million.
- dividend paying equities, from safeish like BKUTK to riskier like KMI and BRMK
That said, I'm considering a variety of uses, in decreasing order of safety:
- Ally is paying 1.5% on savings with a possible deposit bonus
- Providing capital to local private hard money lenders, I believe I can get 6% and scale to at least a few million.
- dividend paying equities, from safeish like BKUTK to riskier like KMI and BRMK
You have 5m with IB and are just borrowing 200k - I am guessing you are just trying it out for now?
Is there a longer dated box offered by IB, say about 3 years?
Any chance you could post a detailed step by step guide on how you have done that with IB?
Thanks again.
I couldn't get the Option Spreads window to work for me, so I ended building a few boxes by hand using the OptionTrader | Strategy Builder functionality.
To be specific:
1) Enter SPX, choose CBOE index
2) Open OptionTrader and use the Strikes dropdown to specify a few round-number strikes (1000, 1500, etc).
3) Choose Strategy Builder, pick an expiry and build the box (click lower call offer, higher call bid, higher put offer, lower put bid).
4) Will show as a Box, then click "Add to Quote Panel" (don't add the legs)
5) I added a Mid column to the Quote Panel, it is 1983.05 in this snapshot. It bounces around but it easier than doing the math in your head.
6) You sell to borrow money, start by floating an offer at least a couple points above the midpoint, so at 1988 in this example. Then lower it a point every 5 minutes until you get filled. Each point is $100, this 2000 point box is worth $200k.
To be specific:
1) Enter SPX, choose CBOE index
2) Open OptionTrader and use the Strikes dropdown to specify a few round-number strikes (1000, 1500, etc).
3) Choose Strategy Builder, pick an expiry and build the box (click lower call offer, higher call bid, higher put offer, lower put bid).
4) Will show as a Box, then click "Add to Quote Panel" (don't add the legs)
5) I added a Mid column to the Quote Panel, it is 1983.05 in this snapshot. It bounces around but it easier than doing the math in your head.
6) You sell to borrow money, start by floating an offer at least a couple points above the midpoint, so at 1988 in this example. Then lower it a point every 5 minutes until you get filled. Each point is $100, this 2000 point box is worth $200k.
