Hi What are the possibilities to earn something risk free with USD through an IB account, on short term ( few days to few weeks) ? Thanks in advance Luis
I read somewhere that one could buy treasuries and use them as collateral to trade stocks or futures with IB, as long as it's at least 500 or 700k USD but can't find the info in IB's website. Anymore info on this ?
I park whatever I don't need for trading in BIL. One of these days it will yield more than zippo again. For now it's simply safe. IMO the short term ETFs like BSV and CSJ are too risky.
Thanks Joe, I checked BIL and it looks I wouldn't even be able to cover the trasaction cost - why do you reckon it's better than holding cash ?
Well, you can buy as much BIL as you want for a buck. And if I understand the regs correctly it can't be hypothecated or re-hypothecated, so it should be safer than cash in an MFGlobal scenario. So I think the two bucks round trip to park, say, several tens of thousands of dollars in BIL for months on end is cheap insurance. That assumes that you don't see opportunities in stocks, or too much risk, which is my current view. But now that I have gotten my liquor bill down to two bucks a day, two bucks suddenly seems like real money.
How do you buy as much BIL as you want for 1USD ? With IB, I just bought 10k shares through the SIM account and it cost me 50USD, i e the standard bundled fee (I also checked the margin with my regular account and it seemed to show standard unbundled fee)
Also checking the activity on BIL it seems one has to give up the spread and buy on the ask, which makes it even more costly using unbundled pricing. What about buying Tbills or german debt directly ?
I stand corrected. You can buy 200 BIL for a buck. I am not a high roller, so I never broke that stashing cash in or out of it.
Indeed, the spread is invariably a penny. Don't know Bunds, but I think treasuries in a brokerage account are like cash, eligible for hypothecation. Could buy TreasuryDirect, but I want instant in and out if opportunity calls. I don't believe for a minute that IB would screw its clients, but I like to be safe anyway, or whatever passes for safe nowadays.
Thanks Joe, I will also look into the hypothecation issue, as it seems to come up quite often since the MF mess.