Hello, I am a French trader with an account at Interactive Brokers. I wanted to sell 100 shares short APPLE and sell a Put ITM. This means not having a gain or loss if the stock goes up or down. But it allows me to have a credit of $40,000 with an annual interest rate according to IB of 0.25% (Short sale of Apple shares) Do you think this is really possible? Won't selling a put ITM result in an automatic assignment and the redemption of my shares? This would amount to closing my position. Apart from the brokerage fees, it is not very risky to try. Apologies for my English.
Lots of inherent risk with this type of trade if AAPL goes up significantly in price. Not sure which expiration and strike you're targeting, but for example: Expiration: Jan 2026 Strike: $230 When you short the shares you will receive about $24K When you sell the put you will receive about $3.4K Total cash in your account = $27.4K What if AAPL goes up to $480 in the next year? To buy back your short will cost you $48K To buy back your short put will cost you close to $0 Total loss = $20.6K There is assignment risk but the odds of early assignment are low.
Thanks for the answer. It is not about selling an atm put but itm Short sale Apple 100 shares $24,200 Sell Put 390 $14,500 Credit account: $38,700 I do not win or lose anything until Apple is above $390 That is a 60% increase in the stock. But I have cash to invest. This seems too simple to me.
This should tip you off that it's not risk free. No such thing as a free lunch ≡ No-Arbitrage principle What you might want to look into more seriously is a "jelly roll'.
I'd say this is good advice but I don't think he wants that. It seems he's looking for a holy grail free money rate arb.... which is, uhmm, hard to come by.
selling the call is the lesser of two evils. Selling puts with short stock is not a rates arb. And he's certainly not going to create a rates arb in an IB account as a retail trader.
Every time I think of something that seems like a sure thing, I remind myself that every possible strategy has already been thought of by people much smarter than me. This game has been around a long time.
OP wants to borrow, on a delta neutral position, for 0.25% But the position wouldn't be delta neutral. Box spread maybe better? I don't like to play with ibkr margin algo.