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.
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.
Why don’t you get the rates on this page from IB? https://www.treasury.gov/resource-c...interest-rates/pages/textview.aspx?data=yield
I was not aware that I can buy TBills in the IB account as IB's contract search page does not return anything https://misc.interactivebrokers.com/cstools/contract_info/v3.10/index.php How do you find them?
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.
I found them guys, thank you. Can anyone comment on trading TBills with IB? Cost, spread, slippage? Any other potential issues?
https://www.elitetrader.com/et/threads/how-to-buy-us-t-govt-bill.324752/#post-4738502 https://www.elitetrader.com/et/threads/ib-cash-vs-short-term-bonds.321736/