Question, I’m trying to get a box spread credit for SPX. Expiration is Dec 21st 2029 with a 500 spread. The credit is about 418ish so around 42k with a payoff of 50k at expiration.
I was trying to execute this through Ally invest but I saw Option Requirement of 50k in the preview window. Obviously this is the payoff amount and is what Ally will be holding from my account.
My account is margin enabled and I have about 100k fully invested so my cash account is 0. I was speaking to a rep there and they said they will hold the 50k for the 5 year period to pay off the loan and I keep the credit. Therefore, my account would be negative and I will be paying margin on that 50k or I would be selling 50k worth of my holdings to use that 48k loan from the spread.
What is the point of this if I will still be paying margin? Do brokerage companies do this or is it only Ally?
HALP
Posted by deepfriedtesties
2 Comments
You may be able to post marginable securities (i.e., $50,000 in SPY) to meet your margin requirements.
Note: All brokerages reserve the right to have higher margin requirements than the exchange minimum.
If that trade returns less than the risk-free rate, why not just go with Treasuries?