Backed by

Combinator

Access low margin rate on your existing account

We make it easy to trade box spreads, a margin loan alternative. Download our chrome extension today.

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SEC Registered
Fiduciary

Reduce your borrowing cost to

5.30%

Reduce margin interest rate with box spreads

Box spreads is the cheapest way to borrow. SyntheticFi makes it easy.

Margin rate*

Box spread rate*

Charles Schwab

13.575%

5.30%

Fidelity

13.575%

5.30%

E*Trade

14.20%

5.30%

Capital loss writeoff

Miss out on tax writeoff

Capital loss never expires

* Rates are floating based on a fixed spread tied to the Secured Overnight Financing Rates (SOFR) or Fed Funds rate. Current as of 9/13/2024.

We are experts in box spreads, regulated by the SEC

Your money is secure. Safety and privacy are our top priorities.

Your investments don't move

You will keep your investments at your existing brokerage account and use the same trading interface. The only thing that changes is your margin interest bill.

SEC regulated and a fiduciary

As a Registered Investment Advisor, we are regulated by the SEC. We provide our service as a fiduciary, meaning we are legally bound to do what is in your best interest.

$3+ billions in strategy

SyntheticFi uses box spread options to reduce the cost of borrowing. Over $3 billions is managed in the same strategy in BOXX ETF.

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What should I expect?

SyntheticFi makes it easy to borrow box spreads. We take care of the trade execution and monitoring.

Step 1

We build your trade for you

Tell us how much you want to borrow and for how long. Leave the rest to us.

Get live market data from CBOE complex order book

Optimize strike prices and expiration dates

Step 2

You control the execution

We don't place the trade for you. You will always have the chance to verify the trade and make a final decision.

Frequently Asked Questions

How does SyntheticFi reduce my margin interest rate?

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SyntheticFi uses an options strategy called "box spreads" to help you pay less on margin.

This strategy gives upfront cash to the user, and requires repayment later with interest. The interest rate on "box spreads" is much lower than the margin interest rate advertised by the brokerage firms.

SyntheticFi trades "box spreads" on your behalf to borrow upfront cash and repay any margin debit balance in the user's account. Because the interest rate on "box spreads" is much lower, SyntheticFi can reduce the cost of borrowing for you.

Read more about box spreads here.

When I use SyntheticFi to borrow money, where does the money come from?

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SyntheticFi uses "box spreads" constructed from listed SPX index options to borrow money. When it sells a "box spreads" combo to get upfront cash, the market counterparty buys a "box spreads" combo and act as the lender. It works just like buying and selling stocks.

Major lenders in the "box spread" market include options market makers, and the BOXX ETF (which has $3B asset under management).

Do I need to worry about options exercise / assignment?

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SyntheticFi exclusively trades exchange-listed SPX index options. These options are European-style, which means they cannot be early exercised. When the expiration date of these options is near, we will help you roll the options to extend the expiration date.

How will the interest rate from SyntheticFi change in the future? Does the low rate expire?

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SyntheticFi is NOT offering low rates as a promotion strategy so it does not expire.

We deliver the low margin rate because it uses "box spreads" strategy, which has a much lower cost of borrowing. The rate generally moves with short-term Treasury yields. We send email alerts when there is significant changes to the  interest rate.

How does SyntheticFi make margin interest tax-deductible?

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SyntheticFi uses an options strategy called "box spreads" to facilitate the borrowing. The interest expense on this strategy is charged as a trading loss on listed index options. Therefore, they are treated as capital losses for tax purposes.

Who is eligible to use SyntheticFi?

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To use SyntheticFi, you must have an existing taxable (non-retirement) brokerage account with margin and options trading access. To borrow using margin, you must have at least $2,000 in your account.

Your brokerage firm and SyntheticFi may apply additional screening to ensure suitability of the investments.

How does SyntheticFi make money?

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Our chrome extension is available free of charge. However, you can engage SyntheticFi for a fully managed service that operates box spreads and manages cash for you.

What does SyntheticFi exactly do in my account?

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SyntheticFi is a robo investment advisor that connects to your existing brokerage account. It manage the "box spreads" options contract for you based on your preferences. SyntheticFi is not authorized to make any changes to your existing investments. You will manage them and place trades by yourself.

Specifically, a few actions it will do includes opening positions when you take out a margin loan, rolling positions if existing box spread options are about to expire, and adjusting or closing positions when your margin debit balance changes.

How do I connect my account to SyntheticFi?

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All you need to do it to use a Chrome extension. You don't ever need to give us your login credentials. Our access to your account is only active when you activates our Chrome extension while logging into your brokerage account using Chrome.

How much can I borrow with SyntheticFi?

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Using SyntheticFi does not change the margin maintenance requirement of your brokerage firm. You should be able to borrow the same amount as you could without SyntheticFi.

In general, you are allowed to borrow up to 50% of your investments based on Regulation T. Refer to your brokerage firm to get more details: any margin calls will issued by your brokerage firm.

What are the risks from using SyntheticFi?

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All standard risks from using margin loans still apply.

Because SyntheticFi uses box spread options to reduce the cost of borrowing, there are additional risks that you should be aware of:

- Interest-rate risk: if interest rate drops, the box spread options combo may reduce in value. You are exposed to this risk ONLY when you wish to pay off your box spread before its expiration date. This risk is comparable to investing in short-term fixed income such as U.S. Treasuries.

- Execution risk: the risk arises from the possibility of difficulty in finding counterparties to execute trades. If SyntheticFi cannot find a counterparty to execute your trade, you may need to take out a margin loan instead, and pay margin interests.

Notably, SyntheticFi uses European-style index options to avoid early exercise / assignment risks.

Have more questions?

Schedule a video call with one of our licensed professionals.

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