margin interest rates?

X

xpsyuvz

I'm just curious what online brokerages are charging these days when you use margin (as oposed to 100% cash) to trade with? I.e. what is the interest that they charge?

Is there very much of a difference between different brokerages or do they all charge about the same?
 
70 bp spread on short/long.......This is JBO structure.

Broker Call + .35bp for debit.
Broker Call - .35bp for credit.

It is very nice to receive interest on the short stock:D

Every Penny Helps bad the returns.
 
TradeCobalt,

Thanks for the reply, but I don't understand what you said.
What is "JBO"?

Also I don't remember what "bp" is. (I thought "basis points" were used to describe the bid/ask spread with bonds, but I don't know how it relates to interest on margined money that is borrowed.)


For example this is what I am imagining with my question:
If I open a trade and end up using/borrowing say $1000 in margin then the longer I keep that trade open the more I will be charged. If the interest is 4% annually then I will be charged $40 if I keep the trade open one year or $20 if I keep the trade open helf a year.

At least this is how what I think is how it works -- but I'm a newbie, so maybe I'm confused somehow.


Anyway, whatever you were talking about seems interesting, but could you explain it a little more?
 
Quote from xpsyuvz:

TradeCobalt,

Thanks for the reply, but I don't understand what you said.
What is "JBO"?

Also I don't remember what "bp" is. (I thought "basis points" were used to describe the bid/ask spread with bonds, but I don't know how it relates to interest on margined money that is borrowed.)


For example this is what I am imagining with my question:
If I open a trade and end up using/borrowing say $1000 in margin then the longer I keep that trade open the more I will be charged. If the interest is 4% annually then I will be charged $40 if I keep the trade open one year or $20 if I keep the trade open helf a year.

At least this is how what I think is how it works -- but I'm a newbie, so maybe I'm confused somehow.


Anyway, whatever you were talking about seems interesting, but could you explain it a little more?
More...

your are correct that bp refers to basis points. 1 bp = 1/100 of a percent . In bonds when they say the bond traded up by X bps, it is the same as saying that the yield changed by X% (e.g. easier to say 10 bips as opposed to a tenth of a percent.)

For the record at IB (interactive brokers), interest earned for USD = LIBOR - .25% and margin is LIBOR + 0.5%.

LIBOR is currently around 3.05% (as a comparison, broker call is currently 4.75%)
 
def,

Hey, thanks for the response.
I wasn't thinking about that traders also earned interest on their "cash" -- but now I think it's starting to make more sense.
 
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