How to get the risk free rate on idle cash?

Discussion in 'Trading' started by andrew black, Feb 23, 2019.

  1. I am looking for suggestions about how to get the risk free interest rate on cash sitting idle in my brokerage account (IB). Interested in a short term solution, no longer than 30 days.

    My definition for "risk free interest rate" would be Fed Funds Rate, 2.5% as of today.

    I am aware of the put–call parity strategy https://en.wikipedia.org/wiki/Put–call_parity ans also that IB pays about 1.7% interest for $100k balance.


    TIA.
     
    Last edited: Feb 23, 2019
  2. ZBZB

    ZBZB

    You can buy 1 month tbills yielding 2.41%
     
  3. ET180

    ET180

    Buying the 1 month t-bills seems like the simplest strategy. IB actually pays 1.9% and you only need a $10k balance to receive interest. In the past, I have been able to slightly beat the benchmark rate by buying some integer multiple of 100 shares of SPY, selling a call and buying a put going at least a few weeks out. I think I documented that strategy somewhere on here. To get that might require that the VIX be lower than it is now. I think I was doing the strategy when the VIX was around 12 or 13.
     
  4. ZBZB

    ZBZB

  5. How do I buy them? What is the contract identifier / symbol?
     
  6. You only get 1.9% for the amount above the $10k threshold and 0% for the first $10k. That is why is 1.7% for $100k.
     
    ET180 likes this.
  7. I found them guys, thank you.

    Can anyone comment on trading TBills with IB? Cost, spread, slippage? Any other potential issues?
     
    Last edited: Feb 23, 2019
  8. luisHK

    luisHK