LESSWRONG
LW

All of Hubertus's Comments + Replies

The Box Spread Trick: Get rich slightly faster
Hubertus10

I don't recommend borrowing money to invest it. 

In today's market I would not set up the virtual deposito I mentioned above, it would not work. 

At this moment (Feb 8 2022) the short box spread AEX 200/800 DEC 2023 yields EUR 59944,-, with settlement in 2023 at EUR 60000,- this would result in a loan at 0,09% interest.  This is nowhere near the negative % I got in 2019. However, with investing in a CD at 1,7% you may think that gives a nice leverage.

By investing the yield in a CD you won't have the broker's cash interest risk. But as long as ... (read more)

Reply
2Arturo L.
Thank you so much for your explanation. I invest very conservatively so have never leveraged or invested with borrowed money, but have been looking to invest a little more aggressively as I am young and would only do so with a small portion of my portfolio. I have never traded options so this is very new to me and interesting to learn and read about.  Thanks again!
The Box Spread Trick: Get rich slightly faster
Hubertus30

In August 2019 I set up a short box spread on the EOE index (AEX). I used options with 200 and 800 strike prices with strike date in December 2023. Setting up the box yielded EUR 61230,- per box and in 2023 the box will settle at EUR -60000,-. This yield was possible due to the negative interest rate so this was an interesting way to borrow money with negative interest. This way I built a virtual deposito with positive yield for my cash. 

This box is intrinsically risk free up to a certain level of market stress. When Covid hit the markets in March 202... (read more)

Reply
1Arturo L.
Nice information Hubertus, would you still recommend a box spread in today's market, and would one be possible with a 4 year CD, I am located in the USA and the 3 year CDs are all at 1.25% however a 4 year CD from NASA FCU is at 1.7% as of Feb 1, 2022.