Interest rate -> automatically done by broker?

Discussion in 'Options' started by skyhr, Jul 14, 2012.

  1. skyhr



    You know how interest rate is used in theory, say for synthetic arbitrage and the like? I was wondering, how EXACTLY does the money from your brokerage account gain interest rate? Is it from T-bills? Do you do this manually or how EXACTLY does this happen?

    Or say you early exercised stock puts and want to use the proceeds to accrue interest, as part of a complex strategy, how would one actually accomplish the part where you gain interest - do you take money out of the brokerage account, and then invest in T-bills? But won't this take too much time? Or does the brokerage have a service for this?

    It seems like interest rate is important to options, but not that much, but I am very confused as to the details of translating theory into practice.

    Thank you ^^