What's wrong with this trade?

[misterkel]

Okay, this is a conversion - no Dividends between now and expiry. Buy it for -280.05, it expires at 280. It's only a .05 profit, BUT - it's guaranteed and you hold 28k for a month, collecting (I presume) the small holding interest paid by IB. Also, you can use that money for another trade, right? Or - margin should be nothing, so why not lever it up and collect multiples of the interest?

I feel like I'm not getting something. Maybe it's legit, but the payoff is just so low, why bother? and what is the risk?

 

[Genevian Speculator]

this trade is called the impossible perpetuum mobile.

 

[traider]

look at the interest rate you get charged for SPY short. It's not fun

 

[guru]

This is not conversion, this is Reversal strategy.
Conversion would usually pay you the amount equal to the interest rate, so you could use it instead of transferring money to a bank and getting interest paid there.
Your example (seemingly-profitable Reversal) may happen when short interest %rate increases, and/or there may be risk of it increasing. I'm also not sure you could actually get -280.05 for it, or a sufficient price to cover costs. Usually it's all calculated to get you the standard interest rate in the end, if you don't overpay.