IB and bonds - 1% margin?

Discussion in 'Trading' started by nzbryant, Jul 27, 2008.

  1. All

    I read IB has only 1% margin requirement for Treasuries with less than 1 year to maturity. Does that mean you are only paying interest on 1% of face value (so 1% x face value x margin interest rate, ie. a tiny number) but receiving the interest on the bond? If so, why wouldnt everyone do this? Seems like a 'free lunch'....?
  2. zdreg


    you are receiving interest on 100% of face value. you are paying interest on 99% of face of value
    a guaranteed losing trade if there ever was one.
  3. Oh thanks. I didnt do the math properly. They lend you 99% - got it.