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I use IBKR and the margin rate is +1 -1.5% the standard rate which is about 6-9% a year on a x6 portfolio margin account. If you're a trader who utilizes tons of leverage then you're likely leaving money on the table by using your broker's margin rate.
What is a box spread first, basically it's a four legged options strategy that you can use to earn yield or borrow money at close to the standard rate (sometimes better).
Say you want to borrow $96.5k to return back $100k by the end of the year (about 3.65%). Using SPX to sell a box spread:
Current SPX price: $7674,
Strike 1: 7250, Strike 2: 8250 - The difference of those two strikes, which is 1000 (x 100) is what you'll need to pay back on expiry, say 1 year from now.
So you'll sell a 4 leg combo - sell the call and buy the put at 7250, sell the put and buy the call at 8250.
To get your SOFR rate, you need to fill above 965.00 (\~3.65%), you can separate the legs and manage each to get better fills (will explain in another post), that's where all your efforts should be, what you fill right now will determine your "effective rate".
And here's the beauty, no matter what price you fill in, and no matter what happens through the year, you'll only be required to pay $100k, it's fixed unlike margin which it's not.
So here you got your effective SOFR rate loan, which will get you an extra 9% per year on your leverage than if you used regular margin loans with no additional risk.
Wanted to keep this post short, can expand if anyone got questions.
EDIT: The underlying of the options you use must satisfy these criterias
1. Cash settled: This ensures you don't get assigned on expiry and your broker only settles the cash difference, saves you from a round-trip of commission fees if you hold till then too.
2. European style: Cannot understate this, early assignment is a real risk and can put you in unnecessary and huge losses
3. Liquid: Must have tight bid/ask spreads and traded frequently.
What works:
\- SPX (satisfies 1, 2 and 3, just us this honestly)
\- NDQ (satisfies 1 and 2, but not 3)
\- SPY, VOO, QQQ and stock-like index ETF does not work, any single stock does not work!