Short term lending

Discussion in 'Trading' started by Jgills, Mar 22, 2018.

  1. Jgills


    what are the most efficient ways for us non-institutions to lend money at short term rates? I know that most brokerage firms put your money in a money market fund, but it earns say 1.5% vs 3ml around 2.25. The first thing that comes to mind is buying SPX boxes (so lending to the occ), but what is better?
    murray t turtle likes this.
  2. Robert Morse

    Robert Morse Sponsor

    Are you looking to borrow money or get paid on unused balances?
  3. Jgills


    Paid on balances
  4. Robert Morse

    Robert Morse Sponsor

    If you are a day trader or do not hold debit balances, you will get the highest interest rate by buying 1 year T-bills with a portion of your account balances. You will lose 5% of your BP. However, it does not work well if you hold longs overnight and have to borrow to cover that.
  5. %%
    Not sure if this is exactly what you have in mind, not a mind reader; lend to a relative you dont like , may never see them again but could be worth it.:caution::caution:
  6. Sig


    You can hold a financials futures position and the offsetting spot position to get pretty close to the institutional interest rate, since the interest rate is built into the differential between the future and the spot price.
  7. But then you would have to post margin, which would mean you’re effectively lending at a significantly worse rate...

    Generally, the mkt doesn’t discount at LIBOR, so you’re unlikely to get it from doing boxes (and there’s still the margin issue). The traditional way is a prime money mkt fund or just directly buying commercial paper.
    Last edited: Mar 23, 2018