Need help figuring out bling spots and risk in this trade

[rbigsby]

Are you sure about this?

https://www.interactivebrokers.com/en/trading/margin-bonds.php

The way I'm reading this is you're putting up 1% of the notional for the trade (your buying power gets reduced by that) - similar to how you put up 5 grand or whatever for a E-Mini but you control 180 grand of notional.

not sure. but 1% is 100 to 1 leverage. seems insanely high.

 

[Matt_K74]

not sure. but 1% is 100 to 1 leverage. seems insanely high.

You were correct - 1% margin is required to get into the trade - but if you buy for 4 mill even though your buying power gets only reduced by 40.000 your cash balance will show negative 3.some million - which is what you've to pay margin interest on - so this trade doesn't exist

 

[earth_imperator]

You were correct - 1% margin is required to get into the trade - but if you buy for 4 mill even though your buying power gets only reduced by 40.000 your cash balance will show negative 3.some million - which is what you've to pay margin interest on - so this trade doesn't exist

Margin fraud by the broker, IMO

 

[rbigsby]

You were correct - 1% margin is required to get into the trade - but if you buy for 4 mill even though your buying power gets only reduced by 40.000 your cash balance will show negative 3.some million - which is what you've to pay margin interest on - so this trade doesn't exist

i think it exists but it's kind of risky. IB has something called an Exposure Fee for High Risk Accounts. I would be suprised if a trade like this didn't get dinged by that.

if the margin interest rate is like 3% APR and your bond is for 3% every 120 days, i think anyone would agree that's profitable. as long as interest rates don't go up during that 120 days.