Box Spreads as Loans - Interactive Brokers IBKR - 2021

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inbox788
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by inbox788 »

outofthebox wrote: Sun Apr 11, 2021 1:40 pmI mean, these short box spreads do not enable you to buy more equities (rather the opposite in my case), they just make the margin loan less expensive (or in my case quite attractive 8-) ).
Too attractive. It does seem too good to be true. What's the harm? Why not invest as usual, but take out these margin loans to make extra change?

What's the world come to? Gravity is real and when the virtual world meets the real world, some things are going to fall.

With Negative Rates, Homeowners in Europe Are Paid to Borrow
Covid-19 pushes benchmarks deeper into negative territory, widening the pool of mortgage holders who receive interest
https://www.wsj.com/articles/with-negat ... 1616664600
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kellykline
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by kellykline »

You know the market is going higher when the mass media CNBC clowns like craemer are pushing out bearish FUD articles calling for a market crash on "egregious" stock market valuations. lol, they've been saying that since 2008. Totally stupid. At sub-1% interest rates, this is the best time to leverage to the hilt. full disclosure, I'm all in. SPX heading to 5000 by EOY guaranteed courtesy of Papa Powell unlimited QE cheat codes. watch out for gang-busting Q2 earnings and revisions to the upside. buy now cuz when those mega yuuuge numbers come out, it'll be too late. buy the rumor, sell the news. melting-up, eat bear meat for breakfast, lunch and dinner. use bear fur for coats and bear skin for my high heels. you're welcome 😎
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outofthebox
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by outofthebox »

inbox788 wrote: Sun Apr 11, 2021 1:53 pm Too attractive. It does seem too good to be true. What's the harm? Why not invest as usual, but take out these margin loans to make extra change?

What's the world come to? Gravity is real and when the virtual world meets the real world, some things are going to fall.

With Negative Rates, Homeowners in Europe Are Paid to Borrow
Covid-19 pushes benchmarks deeper into negative territory, widening the pool of mortgage holders who receive interest
https://www.wsj.com/articles/with-negat ... 1616664600
I agree. Most people do not grasp the effects of negative yields. It is crazy to think that some European countries' 10Y yields are negative!

I do not think it can go much lower, so I will most likely benefit from interest rate rises.
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outofthebox
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by outofthebox »

There is also one catch in it - if you try and maximize the loans with negative interest rates:
You will pay interest rate to IB for any cash balance > 100k EUR (or any currency with negative interest rates) - the going rate at the moment is 0.885 %

But for my approach of lifecycle investing and using it for modest leverage in ETFs, it is perfect.
parval
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by parval »

What are your thoughts on avoiding/handling margin calls?

My understanding is if I buy SSO I can get 2x leverage and pay 1% expense with no risk of mc

With this method I can buy 2x SPY on margin and pay the 0.5% interest on boxes, but....

Is it the case if SPY plummets and I get margin-called, I might be forced to pay back the boxes early, and depending on ask/bid incur a much higher interest rate?
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outofthebox
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by outofthebox »

parval wrote: Mon Apr 12, 2021 10:38 am What are your thoughts on avoiding/handling margin calls?

My understanding is if I buy SSO I can get 2x leverage and pay 1% expense with no risk of mc

With this method I can buy 2x SPY on margin and pay the 0.5% interest on boxes, but....

Is it the case if SPY plummets and I get margin-called, I might be forced to pay back the boxes early, and depending on ask/bid incur a much higher interest rate?
I think there are two scenarios regarding margin calls:
1) Huge intra-day move (-33% with 2x SPY on margin): Biggest problem IMO for this strategy
2) Bear market over several weeks/months/years: You could rebalance on the move down to get close to the performance of a 2x LETF --> I am more relaxed about this scenario due to the possibility to rebalance more frequently in a bear market.

The other problem is indeed what happens to the box spreads:
Someone on Reddit wrote to mark them as "Liquidate last" - but this option is greyed out for my box spreads, so maybe it was fixed and their algorithm would automatically liquidate these boxes last. But this is indeed something to keep an eye on...
inbox788
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by inbox788 »

outofthebox wrote: Mon Apr 12, 2021 5:50 amThere is also one catch in it - if you try and maximize the loans with negative interest rates:
You will pay interest rate to IB for any cash balance > 100k EUR (or any currency with negative interest rates) - the going rate at the moment is 0.885 %
LOL! Pay the bank to trust them with my money and use it and profit from it. We've so conditioned rightly or wrongly that it's so foreign to think more like the Swiss numbered banks accounts that just getting your monies back that used to involve physically getting there just to preserve cash was enough. But I guess there's gold, diamonds and Bitcoin for that today and Switzerland isn't all that it used to be.

Anyway, the 101 box trades went through and used up $85k ($800/box) in Buying Power and Net Liq Value went down $8-9k ($85/box). I didn't understand the difference at first, but I did this in the IRA account not the Margin account where the difference is more like $5000/box. My margin on the IRA with $222k Net Liq Value is now over $4M! Would this work in a real account? Anyway, I still don't know where my "loan cash" is sitting and how to get it out of the account without a margin call, and further complicated it by using an IRA account.

Please don't do this in real life. I suspect the simulator wasn't designed for this situation. FWIW, the simulator filled the one $392 limit order at $392.40 and expired the 100 market order from previous day. I don't understand why it is different from the other market order entered last weekend that did execute. But I re-entered it this morning and got 100 fills at 391.70.

[One more observation. In a 200k IRA account with $4M margin, one moment it showed $11k P/L Open (0.3%) (of the $4M I assume, cause it's more than 5% of 200k). Suddenly, it went near zero, then -$6k!, and fluctuating, now near zero. As the legs of the box are updating in real time, the real time position value fluxtuates along with it and I observed Net Liq Value $211k to 228k and I'm sure it went outside that at times) This must be how 20X leverage feels like, and I don't like it, even though the box is supposed to be zero or low risk.]
parval
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by parval »

outofthebox wrote: Mon Apr 12, 2021 10:55 am
parval wrote: Mon Apr 12, 2021 10:38 am What are your thoughts on avoiding/handling margin calls?

My understanding is if I buy SSO I can get 2x leverage and pay 1% expense with no risk of mc

With this method I can buy 2x SPY on margin and pay the 0.5% interest on boxes, but....

Is it the case if SPY plummets and I get margin-called, I might be forced to pay back the boxes early, and depending on ask/bid incur a much higher interest rate?
I think there are two scenarios regarding margin calls:
1) Huge intra-day move (-33% with 2x SPY on margin): Biggest problem IMO for this strategy
2) Bear market over several weeks/months/years: You could rebalance on the move down to get close to the performance of a 2x LETF --> I am more relaxed about this scenario due to the possibility to rebalance more frequently in a bear market.

The other problem is indeed what happens to the box spreads:
Someone on Reddit wrote to mark them as "Liquidate last" - but this option is greyed out for my box spreads, so maybe it was fixed and their algorithm would automatically liquidate these boxes last. But this is indeed something to keep an eye on...
Ah thanks for your thoughts. I think for just leveraging SPY this might not be worth it, since the LETF ERs are quite low already.

Maybe better to cash out the boxes and yield farm in defi :)
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outofthebox
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by outofthebox »

Yes, I have also thought about using simply a SPY LETF and it was a close call - but I decided against it. Due to the daily rebalancing and less flexibility (with this solution right now, I can invest in a Vanguard-All-World fund + maybe some EM ETF and can realize an individual leverage factor of 1.5) + there are not many UCITS leveraged funds for Europeans to choose from.
comeinvest
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by comeinvest »

parval wrote: Mon Apr 12, 2021 1:48 pm
Ah thanks for your thoughts. I think for just leveraging SPY this might not be worth it, since the LETF ERs are quite low already.
What is the lowest LETF ER right now?
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cos
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by cos »

comeinvest wrote: Mon Apr 12, 2021 8:12 pm
parval wrote: Mon Apr 12, 2021 1:48 pm
Ah thanks for your thoughts. I think for just leveraging SPY this might not be worth it, since the LETF ERs are quite low already.
What is the lowest LETF ER right now?
Out of all the ones worth considering, UPRO has an ER of 0.93%. I'm reluctant to call that "low," but it's good enough for me.
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unclescrooge
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by unclescrooge »

kellykline wrote: Tue Mar 30, 2021 5:47 pm The key to the strategy is to pick the one that expires the longest on European style options. Otherwise you will not be able to get the rates below 1%. Which is the whole point of the strategy. Hope someone who’s done it before I can shed light on how to do it properly
Doesn't IB charge 1.07% for portfolio margin? How much leverage are you getting on this box disc loan?
Semantics
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by Semantics »

unclescrooge wrote: Tue Apr 13, 2021 12:11 am
kellykline wrote: Tue Mar 30, 2021 5:47 pm The key to the strategy is to pick the one that expires the longest on European style options. Otherwise you will not be able to get the rates below 1%. Which is the whole point of the strategy. Hope someone who’s done it before I can shed light on how to do it properly
Doesn't IB charge 1.07% for portfolio margin? How much leverage are you getting on this box disc loan?
For amounts borrowed between 100k-1M. The first 100k is 1.57%, I expect the majority of people experimenting with this are in that range. As per earlier in the thread, people are getting rates of around 0.5-0.7% depending on the duration.

The other thing is the box spread turns into a capital loss when you close it, which gets better tax treatment in the US than margin interest since the latter requires itemizing and spending the loan on securities (and excludes those with tax-exempt distributions like munis).

80+ bps is nothing to sneeze at!
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kellykline
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by kellykline »

unclescrooge wrote: Tue Apr 13, 2021 12:11 am
kellykline wrote: Tue Mar 30, 2021 5:47 pm The key to the strategy is to pick the one that expires the longest on European style options. Otherwise you will not be able to get the rates below 1%. Which is the whole point of the strategy. Hope someone who’s done it before I can shed light on how to do it properly
Doesn't IB charge 1.07% for portfolio margin? How much leverage are you getting on this box disc loan?
My leverage ratio is 10x right now. :D
I told you, new new new bull market, unstoppable! TQQQ

IB charges 1.07%, but that rate increases as the benchmark (treasury) rate increases. My boxes expire at the end of 2023, so my sub-1% rate loans are fixed until expiry.
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kellykline
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by kellykline »

unclescrooge wrote: Tue Apr 13, 2021 12:11 am
kellykline wrote: Tue Mar 30, 2021 5:47 pm The key to the strategy is to pick the one that expires the longest on European style options. Otherwise you will not be able to get the rates below 1%. Which is the whole point of the strategy. Hope someone who’s done it before I can shed light on how to do it properly
Doesn't IB charge 1.07% for portfolio margin? How much leverage are you getting on this box disc loan?
My leverage ratio is 10x right now. :D
I told you, new new new bull market, unstoppable! TQQQ. taking some profits off lol, paying off the loan with profits!

IB charges 1.07%, but that rate increases as the benchmark (treasury) rates increase. My boxes expire at the end of 2023, so my sub-1% rate loans are fixed until expiry.
Last edited by kellykline on Tue Apr 13, 2021 12:17 pm, edited 4 times in total.
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outofthebox
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by outofthebox »

kellykline wrote: Tue Apr 13, 2021 10:01 am My leverage ratio is 10x right now. :D
I told you, new new new bull market, unstoppable! TQQQ. taking some profits off lol, paying off the loan with profits!
Wait, what? :shock:

What is your margin cushion / initial margin? Must be very close to NLV?
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kellykline
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by kellykline »

outofthebox wrote: Tue Apr 13, 2021 10:04 am
kellykline wrote: Tue Apr 13, 2021 10:01 am My leverage ratio is 10x right now. :D
I told you, new new new bull market, unstoppable! TQQQ. taking some profits off lol, paying off the loan with profits!
Wait, what? :shock:

What is your margin cushion / initial margin? Must be very close to NLV?
Yes I told you I was all in a few weeks ago before this mega rally! Now I’m just slowly taking profits off to pay the loan down for some cushion. Just watch the MAs, easy money! Stonks always go up

ps: Papa Powell ain't gonna be in office indefinitely. My guess, he leaves before it all blows up in our faces lol! Maybe 2024 to help with the elections of the "opposing party". I mean Kanye's party, channel the "ye!". In the meantime, let the brrrrrr rain!!!! :moneybag :moneybag :moneybag :moneybag :moneybag :moneybag :moneybag :moneybag :moneybag :moneybag :moneybag :moneybag
inbox788
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by inbox788 »

outofthebox wrote: Tue Apr 13, 2021 10:04 am
kellykline wrote: Tue Apr 13, 2021 10:01 am My leverage ratio is 10x right now. :D
I told you, new new new bull market, unstoppable! TQQQ. taking some profits off lol, paying off the loan with profits!
Wait, what? :shock:

What is your margin cushion / initial margin? Must be very close to NLV?
Are you including the 3X from the TQQQ and the 4X from the margin loans (25% margin requirement)? That's potentially about 12X leverage...just remember, leverage cuts both ways.
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kellykline
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by kellykline »

inbox788 wrote: Tue Apr 13, 2021 1:07 pm
outofthebox wrote: Tue Apr 13, 2021 10:04 am
kellykline wrote: Tue Apr 13, 2021 10:01 am My leverage ratio is 10x right now. :D
I told you, new new new bull market, unstoppable! TQQQ. taking some profits off lol, paying off the loan with profits!
Wait, what? :shock:

What is your margin cushion / initial margin? Must be very close to NLV?
Are you including the 3X from the TQQQ and the 4X from the margin loans (25% margin requirement)? That's potentially about 12X leverage...just remember, leverage cuts both ways.
The Feds are throwing money at you, why wouldn't you leverage? This is NOT the time to be safe like a boomer, you'll end up losing money. Who buys bonds these days lol! Unlimited QE hack, keep on printing!!!!
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outofthebox
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by outofthebox »

kellykline wrote: Tue Apr 13, 2021 1:14 pm
inbox788 wrote: Tue Apr 13, 2021 1:07 pm Are you including the 3X from the TQQQ and the 4X from the margin loans (25% margin requirement)? That's potentially about 12X leverage...just remember, leverage cuts both ways.
The Feds are throwing money at you, why wouldn't you leverage? This is NOT the time to be safe like a boomer, you'll end up losing money. Who buys bonds these days lol! Unlimited QE hack, keep on printing!!!!
Which margin cushion does IB display to you? Just out of curiosity, to know what is possible...

P.S.: For him (https://www.reddit.com/user/Adderalin/), who posted a lot about using box spreads for leverage, it did not go that well :wink:
secondopinion
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by secondopinion »

kellykline wrote: Tue Apr 13, 2021 1:14 pm
inbox788 wrote: Tue Apr 13, 2021 1:07 pm
outofthebox wrote: Tue Apr 13, 2021 10:04 am
kellykline wrote: Tue Apr 13, 2021 10:01 am My leverage ratio is 10x right now. :D
I told you, new new new bull market, unstoppable! TQQQ. taking some profits off lol, paying off the loan with profits!
Wait, what? :shock:

What is your margin cushion / initial margin? Must be very close to NLV?
Are you including the 3X from the TQQQ and the 4X from the margin loans (25% margin requirement)? That's potentially about 12X leverage...just remember, leverage cuts both ways.
The Feds are throwing money at you, why wouldn't you leverage? This is NOT the time to be safe like a boomer, you'll end up losing money. Who buys bonds these days lol! Unlimited QE hack, keep on printing!!!!
This is the true example of stock market craze; leveraging to extreme multipliers. If I recall right, this happened in the late 1920s; and Lehman Brothers I think had high leverage as well in 2007. I am not leveraged; my guess is that I will pick up the loose change when all of the crazy leverage speculators lose all their money and have to sell on extreme discounts. I am waiting for them to learn the hard way.
It is better to be half-wrong than have a 50% chance of being all-wrong. With the former, you will learn and have money to try again. Otherwise, you will never learn and will have nothing eventually.
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by jarjarM »

secondopinion wrote: Tue Apr 13, 2021 5:04 pm
kellykline wrote: Tue Apr 13, 2021 1:14 pm
inbox788 wrote: Tue Apr 13, 2021 1:07 pm
outofthebox wrote: Tue Apr 13, 2021 10:04 am
kellykline wrote: Tue Apr 13, 2021 10:01 am My leverage ratio is 10x right now. :D
I told you, new new new bull market, unstoppable! TQQQ. taking some profits off lol, paying off the loan with profits!
Wait, what? :shock:

What is your margin cushion / initial margin? Must be very close to NLV?
Are you including the 3X from the TQQQ and the 4X from the margin loans (25% margin requirement)? That's potentially about 12X leverage...just remember, leverage cuts both ways.
The Feds are throwing money at you, why wouldn't you leverage? This is NOT the time to be safe like a boomer, you'll end up losing money. Who buys bonds these days lol! Unlimited QE hack, keep on printing!!!!
This is the true example of stock market craze; leveraging to extreme multipliers. If I recall right, this happened in the late 1920s; and Lehman Brothers I think had high leverage as well in 2007. I am not leveraged; my guess is that I will pick up the loose change when all of the crazy leverage speculators lose all their money and have to sell on extreme discounts. I am waiting for them to learn the hard way.
So if late Feb/early Mar happened again, then margin call happens. I'm not sure if kellykline is serious though.
secondopinion
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by secondopinion »

jarjarM wrote: Tue Apr 13, 2021 5:08 pm
secondopinion wrote: Tue Apr 13, 2021 5:04 pm
kellykline wrote: Tue Apr 13, 2021 1:14 pm
inbox788 wrote: Tue Apr 13, 2021 1:07 pm
outofthebox wrote: Tue Apr 13, 2021 10:04 am

Wait, what? :shock:

What is your margin cushion / initial margin? Must be very close to NLV?
Are you including the 3X from the TQQQ and the 4X from the margin loans (25% margin requirement)? That's potentially about 12X leverage...just remember, leverage cuts both ways.
The Feds are throwing money at you, why wouldn't you leverage? This is NOT the time to be safe like a boomer, you'll end up losing money. Who buys bonds these days lol! Unlimited QE hack, keep on printing!!!!
This is the true example of stock market craze; leveraging to extreme multipliers. If I recall right, this happened in the late 1920s; and Lehman Brothers I think had high leverage as well in 2007. I am not leveraged; my guess is that I will pick up the loose change when all of the crazy leverage speculators lose all their money and have to sell on extreme discounts. I am waiting for them to learn the hard way.
So if late Feb/early Mar happened again, then margin call happens. I'm not sure if kellykline is serious though.
With 10x leverage and all like comments, margin calls are really easy to have happen at those multipliers. I certainly hope that this is not the case for their sake. If not, then it is over for them eventually.
It is better to be half-wrong than have a 50% chance of being all-wrong. With the former, you will learn and have money to try again. Otherwise, you will never learn and will have nothing eventually.
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kellykline
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by kellykline »

secondopinion wrote: Tue Apr 13, 2021 5:12 pm
jarjarM wrote: Tue Apr 13, 2021 5:08 pm
secondopinion wrote: Tue Apr 13, 2021 5:04 pm
kellykline wrote: Tue Apr 13, 2021 1:14 pm
inbox788 wrote: Tue Apr 13, 2021 1:07 pm

Are you including the 3X from the TQQQ and the 4X from the margin loans (25% margin requirement)? That's potentially about 12X leverage...just remember, leverage cuts both ways.
The Feds are throwing money at you, why wouldn't you leverage? This is NOT the time to be safe like a boomer, you'll end up losing money. Who buys bonds these days lol! Unlimited QE hack, keep on printing!!!!
This is the true example of stock market craze; leveraging to extreme multipliers. If I recall right, this happened in the late 1920s; and Lehman Brothers I think had high leverage as well in 2007. I am not leveraged; my guess is that I will pick up the loose change when all of the crazy leverage speculators lose all their money and have to sell on extreme discounts. I am waiting for them to learn the hard way.
So if late Feb/early Mar happened again, then margin call happens. I'm not sure if kellykline is serious though.
With 10x leverage and all like comments, margin calls are really easy to have happen at those multipliers. I certainly hope that this is not the case for their sake. If not, then it is over for them eventually.
LOL you just mad that you’re not making any money with your conservative plays! I’m already up so much on TQQQ my rapidly expanding asset value is paying off my 10x leverage! I told you market is gonna rally, u just didn’t listen! :D :D :D :moneybag :moneybag :moneybag :moneybag :moneybag
secondopinion
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by secondopinion »

kellykline wrote: Wed Apr 14, 2021 6:41 am
secondopinion wrote: Tue Apr 13, 2021 5:12 pm
jarjarM wrote: Tue Apr 13, 2021 5:08 pm
secondopinion wrote: Tue Apr 13, 2021 5:04 pm
kellykline wrote: Tue Apr 13, 2021 1:14 pm

The Feds are throwing money at you, why wouldn't you leverage? This is NOT the time to be safe like a boomer, you'll end up losing money. Who buys bonds these days lol! Unlimited QE hack, keep on printing!!!!
This is the true example of stock market craze; leveraging to extreme multipliers. If I recall right, this happened in the late 1920s; and Lehman Brothers I think had high leverage as well in 2007. I am not leveraged; my guess is that I will pick up the loose change when all of the crazy leverage speculators lose all their money and have to sell on extreme discounts. I am waiting for them to learn the hard way.
So if late Feb/early Mar happened again, then margin call happens. I'm not sure if kellykline is serious though.
With 10x leverage and all like comments, margin calls are really easy to have happen at those multipliers. I certainly hope that this is not the case for their sake. If not, then it is over for them eventually.
LOL you just mad that you’re not making any money with your conservative plays! I’m already up so much on TQQQ my rapidly expanding asset value is paying off my 10x leverage! I told you market is gonna rally, u just didn’t listen! :D :D :D :moneybag :moneybag :moneybag :moneybag :moneybag
Mad, no. I get the return distribution based on my risk taken; you get return distribution based on your risk taken. Just understand that the nature of your risk is far beyond what I will take; and history backs my statement that margin calls under that leverage is likely (even to the point where you could owe multiples of your present portfolio value). The possibility of owing 2x to 3x your portfolio value in debt is real, not fake. Margin calls and liquidation will not save you from owing money.

No amount of positive returns will counteract a 100+% loss.
It is better to be half-wrong than have a 50% chance of being all-wrong. With the former, you will learn and have money to try again. Otherwise, you will never learn and will have nothing eventually.
inbox788
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by inbox788 »

jarjarM wrote: Tue Apr 13, 2021 5:08 pmSo if late Feb/early Mar happened again, then margin call happens. I'm not sure if kellykline is serious though.
Are you wearing swimming trunks?
https://www.goodreads.com/quotes/109034 ... -tide-goes
inbox788
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by inbox788 »

secondopinion wrote: Wed Apr 14, 2021 11:57 amMad, no. I get the return distribution based on my risk taken; you get return distribution based on your risk taken. Just understand that the nature of your risk is far beyond what I will take; and history backs my statement that margin calls under that leverage is likely (even to the point where you could owe multiples of your present portfolio value). The possibility of owing 2x to 3x your portfolio value in debt is real, not fake. Margin calls and liquidation will not save you from owing money.

No amount of positive returns will counteract a 100+% loss.
I'm envious of some of the folks that have made it big in tech bets, biotech, bitcoin, and others, but I'm content that I'm doing ok and steadily growing with what I believe to be lower risk. And I'm pessimistic about my ability to time and select these big bets. Chances are I'd be late to the party or pick the wrong horse.

Anyway, there's leverage with unlimited downside (symmetric; shorting a stock) and limited downside (asymmetric; using options). Returns are better with symmetric leverage, since you pay a premium for the downside protection or limitation.

You can't lose more than you put in with TQQQ (asymmetric) or if you buy puts. This box loan appears to expose one to symmetric risk if it goes haywire. Exceeding margin is what gets you in trouble and owing money, so if margin calls are timed and executed correctly, the "investor" should go broke before going into (too much) debt. It's not clear to me how these box spread loans enable more margin, but it seems to alter this failsafe.
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outofthebox
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Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by outofthebox »

outofthebox wrote: Tue Apr 13, 2021 1:49 pm
kellykline wrote: Tue Apr 13, 2021 1:14 pm
inbox788 wrote: Tue Apr 13, 2021 1:07 pm Are you including the 3X from the TQQQ and the 4X from the margin loans (25% margin requirement)? That's potentially about 12X leverage...just remember, leverage cuts both ways.
The Feds are throwing money at you, why wouldn't you leverage? This is NOT the time to be safe like a boomer, you'll end up losing money. Who buys bonds these days lol! Unlimited QE hack, keep on printing!!!!
Which margin cushion does IB display to you? Just out of curiosity, to know what is possible...
@kellykline:
It was a serious question, I do not know why you are not answering? Or is this all just a joke/trolling?
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outofthebox
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Joined: Thu Apr 08, 2021 3:33 pm

Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by outofthebox »

inbox788 wrote: Wed Apr 14, 2021 12:26 pm I'm envious of some of the folks that have made it big in tech bets, biotech, bitcoin, and others, but I'm content that I'm doing ok and steadily growing with what I believe to be lower risk. And I'm pessimistic about my ability to time and select these big bets. Chances are I'd be late to the party or pick the wrong horse.
There is a lot of survivorship bias involved, looking at gain posts for example at WSB on Reddit.

I think, taking the steady path, like you say, maybe with modest leverage (1.2-1.5x), goes a long way...
Last edited by outofthebox on Wed Apr 14, 2021 1:09 pm, edited 1 time in total.
jarjarM
Posts: 1077
Joined: Mon Jul 16, 2018 1:21 pm

Re: Box Spreads as Loans - Interactive Brokers IBKR - 2021

Post by jarjarM »

inbox788 wrote: Wed Apr 14, 2021 12:14 pm
jarjarM wrote: Tue Apr 13, 2021 5:08 pmSo if late Feb/early Mar happened again, then margin call happens. I'm not sure if kellykline is serious though.
Are you wearing swimming trunks?
https://www.goodreads.com/quotes/109034 ... -tide-goes
Let me check :o
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