No, you can't save the margin interest (or if you can, please
tell me how to get free money for 3 months and we'll both be
rich!). If you have the money, you miss the opportunity
interest of putting that money somewhere else. Say in
a good stock, commercial paper, etc. You can of course
change the effective interest rate.
The arbs can do this exactly because they have (compared to
us) low transaction costs, low interest, and an ear to the
ground to get out before that $10 drop if the deal goes south.
Don't knock it, though. It's exactly these arbs that maintain
a fair and liquid market because they put a concrete value on
the risk. Unless you can outthink the pro arbitrageur, you'll
end up short in this kind of arbitrage because your
costs are different (as above). Maybe you could do it once,
but on the average you can't (or else you will be one of them).
Regards
Spots |
