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I wanted to test out the arbitrage margin strategy in 2025 to see if I could squeeze a profit out of the spread. I know people are spooked about margin but I figured I would experiment and track the results. I took precautions and didn't overleverage so that I was at the risk of being margin called.
**Relevant Context:**
* Brokers charge a blended \~7.5% interest.
* I bought a basket of "yield trap" style ETFs that yield anywhere from 15% to 100%.
* Including:
* QDTY, SDTY, YMAX, ULTY, AMZY, TSLW, MSFO, AAPW, MSTY, NVDY, CONY, TSLY, WPAY (much newer position), QQQI, SPYI
* Best performers in terms of total return were NVDY and AMZY.
* I reached house money status with CONY (but I held this since 2024 with my own cash)
**Starting Debt:** $75,000 (Jan 2025)
**Portfolio Value (NAV):** Dropped to $58,000 (-$17k loss). by December 31st 2025
Basically, the funds eroded like crazy. **BUT...**
**Dividends Collected:** $34,481.
The payouts were high enough that they covered the $17k drop in value.
I didn't spend a single cent of the income outside of the portfolio. I either funneled every dividend check immediately back into the margin loan for my own peace of mind, or I used some of the dividends to add to other growth stocks I own.
* **Debt Start:** $75k
* **Debt Now:** \~$45k
By aggressively paying down the principal, I lowered my monthly interest bill and kept my equity buffer safe even while the share prices were tanking.
After paying the broker roughly \~$5,600 in interest, I 'profited' **\~$11,400** in net cash flow using $0 of my own capital. At least before taxes.. we'll see what the damage is there soon.
Just wanted to share the results for anyone thinking of doing the same. Just be sure to take it easy and not overleverage yourself.