A short box spread is another way to take a loan, except it is not from your broker, but from the options market. It is a combination of a synthetic long and synthetic short. This essentially gives you the best borrowing rate that your broker will never beat. [This blog post](https://thefinancebuff.com/short-box-spread-vs-margin-loan-fidelity.html) describes the process. I created [this video](https://www.youtube.com/watch?v=mSmY9HNzeAo) and [slides](https://docs.google.com/presentation/d/1-CDrMKt7snfninR7kycAI7HIv2nGCyVBD-ozjVqwVUc/edit?slide=id.p#slide=id.p) going into the mechanics. [Here](https://youtu.be/IjVoQqNhsmM?si=tfZDomQMdVoOLbN4) is another good video about how this works.
-
One way to understand how this works is to consider 2 parties in the following transaction. Let's say I offer as a package to sell the combined contract of: buy stock A at $200, sell stock A at $100. I am offering to buy high and sell low, with a difference of $100. A 2nd party, the buyer, can see that this package is worth $100, and they are willing to pay me that.
+
One way to understand how this works is to consider 2 parties in the following transaction. Let's say I offer as a package to sell the combined contract of: buy stock A at $200, sell stock A at $100. I am offering to buy high and sell low, with a difference of $100. A 2nd party, the buyer, takes the opposite side: buy low and sell high, again with a difference of $100 which is the worth of the contract. They are willing to pay me $100.
Now let's say I offer the same package, but I introduce a delay: you must wait 1 year to execute this contract. From the buyer's perspective, there is still the $100 value of the package, but they have to wait 1 year. There should be a cost to that waiting. So instead of offering $100 for the package, they offer $95. In other words, they are charging me $5 interest.