What is the best way to use idle cash of an active option trader

Discussion in 'Options' started by curiosity, Nov 1, 2024.

  1. I am currently with Schwab which does not auto sweep idle cash to money market fund like Fidelity
    so I am looking to purchase either MF or T-bill or Treasury ETF

    Active option trader and active equity trader as well so may need money at any time ...with Fidelity its convenient - u dont have to manually do anything ..but with Schwab you have to

    Also I want to choose an instrument that can give options buying power - (same as cash or similar) immediately - I heard that MMF - you have to wait for like 30 days so in that sense what is the best option?
    T-bills or Treasury etf like sgov or Bil
     
  2. ironchef

    ironchef

    With Schwab, move funds in and out of MMF is not automatic but one click is not too big of a trouble for me. To avoid margin borrowing, if you want to buy option or equity, you can sell the MMF the same day to buy the option because it takes one day for both to settle.
     
    curiosity likes this.
  3. FSU

    FSU

    You may also want to consider buying an SPX Box. Depending on the type of account you have it may have a minimal effect on your buying power. It has the added benefit of some of your income being treated as long term capital gains (60%) instead of interest income.

    You can go to Box trades to give you an idea where different boxes are trading with their implied interest rates. Box Spread Yields | Boxtrades.com
     
    Adam777, dorietrading and curiosity like this.
  4. I am primarily a option seller - like naked calls or puts as well as short strangle and credit spreads - now pls advise what is the best instrument that I should buy which can continue to earn interest and also give me most buying power for trading short options - credit spreads etc.
     
  5. newwurldmn

    newwurldmn


    Theres also the box etf which will give you full long term gains If you hold for over a year.
     
    TrailerParkTed likes this.
  6. ZBZB

    ZBZB

    You could be 100% long no or low divendend growth stock and trade options on margin.
     
  7. ironchef

    ironchef

    Sorry, I can't answer that question because I am exclusively long options these days.

    Back in 2013-2014 I wrote a lot of naked calls/puts, mostly on margin backup by my long portfolios but I never paid attention to the question you asked so I can't help you.
     
  8. I did not understand what u r trying to say...please explain
     
  9. I wonder if BOX is treated like cash for portfolio margin purposes. That would make it a perfect tool.
     
  10. newwurldmn

    newwurldmn

    Oh good point. Maybe with a prime. My broker will prob give it a 20percent haircut.
     
    #10     Nov 3, 2024