Isn't more cost efficient to short sell t-bills instead of margin loan? The best I can get with my broker is 6.6% loan while 6 month t-bill is about 5.3%. TIA.
Short selling t-bills instead of margin loan
- Thread starter andrew black
- Start date
So you think you're going to be able to short t-bills for the exact same piece as their interest rate? Don't you think maybe that's a little optimistic on your part?
What does a 6 month call cost right now?
What does a 6 month call cost right now?
Oct 31 bid yield is 5.383%. I have no doubt that I can execute the sell order at this yield.
How do you benefit? Show with numbers that your account is better off.
you probably need to borrow from margin to short the position, so what’s the trade plan?
a $250k position requires $488 margin.
again, what's the trade plan?
it is a false logic to assume the broker would let one used $500 account balance to short a $250k trade and deposit the proceeds to the account. available cash, buying power, net liquidation value and impact margin are not the same.
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yeah, my plan was to buy $250k worth of stock with $488 /sarc
This works with box spreads so theoretically it could/should work with t-bills too - AFAIK they are both held in the securities segment of your account. Let us know if you try it.
You are right, people are using SPX boxes for similar purpose. I've done it myself many times, and the main issue the SPX boxes is an unreliable fill. It may take many hours / days to get a fill if you don't want to overpay. The last fill I got, in April, was about 0.4% above the t-bill rate, and it took an entire day.
I will try shorting a t-bill today. Couple of things I already noticed. I'm with IBRK and the order is in increments of $250k. There is no borrowing cost but some t-bill are not available / hard to borrow. Seems that t-notes are easier borrow. And $5 commission.
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