How to earn 20-30% a year on IB cash/margin

D

Daal

Buy BTCC.B (Canada Unhedged FX Bitcoin ETF). 1 BTC = 6690 shares (I think, better to double check this). Short an equivalent amount of BAKKT BTC June futures (ICE, each contract is 1 BTC). Earn 20-30% a year

Risks:
-IB could jack up margin requirements and get you liquidated on the futures leg.
-The BTCC market price could dettach from the BAKKT price
-If you forget to roll over the futures, you have to deliver BTC. I assume IB will auto-liquidate the trader before that happens though
-The BTC BAKKT futures is a little illiquid so it can take a while to get a position in
-Random IB marks on either leg could lead to liquidations

I think the margins risks are little too high for my tastes but maybe IB can clarify what their margins policy on the futures are likely to be going forward. IIRC they had as much as 300% margins on shorting GBTC back in 2017, but its been a while and I could be wrong
This might be only worth for people that have a huge amount of free margin avaliable, otherwise the liquidation risks are high...
 
Bitcoin contango trade is good but My buy and hold Bitcoin and collect 6% yield has outperformed this over the years and am comfortable with the added Risk.
 
Fain said:
Bitcoin contango trade is good but My buy and hold Bitcoin and collect 6% yield has outperformed this over the years and am comfortable with the added Risk.
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They idea would be to do both. Own coins and do the trade on the side with spare cash, unless you advocate 100% all-in BTC. But I would need 5x free margin over the requirements to cover any surprise from a margin hike before doing this
 
cruisecontrol said:
already disappearing, only seeing 10% now. all you guys putting on this trade now? :p

https://www.theice.com/products/72035464/Bakkt-Bitcoin-USD-Monthly-Futures/data?marketId=6428465
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My calculation might have been off by some when I did it. I'm not subscribed to real-time Canada data. Should be between 10-20% though, and it fluctuates through the year. When these rates get really high, it might make sense for some to do this arb, but they need to be aware of the margin risk
 
Daal said:
They idea would be to do both. Own coins and do the trade on the side with spare cash, unless you advocate 100% all-in BTC. But I would need 5x free margin over the requirements to cover any surprise from a margin hike before doing this
More...

I don't advocate all-in on bitcoin for a portfolio but the amount I have, I'm comfortable with a buy and hold + collect yield. Bitcoin is volatile and brokers will change margin policies fast.
 
Fain said:
I don't advocate all-in on bitcoin for a portfolio but the amount I have, I'm comfortable with a buy and hold + collect yield. Bitcoin is volatile and brokers will change margin policies fast.
More...

When you say yield, how exactly does this work? Are you lending BTC on crypto exchange and in return you get interest (and you can't sell BTC)?
 
I did this trade last month, and I think the margin was 200% on the short BAKKT futures. I closed it out after a few days with some gains, but the margin is too onerous. I was worried about bitcoin spiking after market hours and not having the BTCC reflect that until the next trading day - would I have been auto-liquidated before market open the next day?
 
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