Box spread is a strategy used by institutions to borrow directly from the stocks market. SyntheticFi makes it easy.
It uses a combination of four options to create a fixed pay off at a future date. Borrowers will receive cash upfront in their brokerage account, and they need to repay it with interest later.
"Market participants have used options box spreads as a financing tool for decades. Indeed, on any given day, a handful of large box spread trades, worth upwards of hundreds of million dollars, are consummated."
Box spread is not free money. Understand how it works with margin requirements.
Margin buying power decides how much you can trade or withdraw in your account. Cash balance determines how much you pay in margin interest.
Borrowing a box spread will increase the cash balance and help you avoid margin interest charges. It doesn't affect the margin maintenance requirement.
If you have margin buying power, you can withdraw cash from your account up to the buying power limit. If you have cash balance from a box spread, you can withdraw it without paying margin interests.
At SyntheticFi, a box spread synthetic loan is constructed with a short box spread on S&P 500 Index options.
Not exposed to stock market fluctuations
No early exercise risk: use European-style options
Get the best rate: Interest rate is set through bidding on exchange
Schedule a video call with one of our licensed professionals.
.png)