Thank you all for the useful thread. Like some others I discovered boxes after deciding to employ lifecycle investing. After some investigation and experimentation, I think Boxes are probably the best source of leverage (also looked into deep in the money "LEAP" calls, futures and regular margin)
- Cheapest (on par with futures)
- Easiest to manage (no future rolling or managing of option leverage ratios, separated financing and investment transactions)
- No dividend risk
- Ability to support a diversified portfolio (futures and LEAPs are really only viable on US and Europe)
- Allows for smaller portfolio building via ETFs (vs futures or options where the minimum trade is $20k - $40k)
Have I missed anything?
Others have advocated for LEAPS, but I think there is a often a fundamental flaw in the maths presented. Using DITM calls, you lose dividends on 100% of the exposure to get say ~50% leverage. If the expected dividend yield is 2% and the implied cost (strike + option price) is equal to the current index level, its actually an effective 4% marginal financing rate vs an unlevered portfolio.
Regarding boxes on ESTX50, I'm Australian and get risk based margin for these. But I think there is a question around what currency you want your debt to be denominated in to best manage a drawdown. AUD makes sense for me as it reliably depreciates when there is a stock market fall and is the currency of my income / emergency savings. In which case, may as well only use the SPX and sell corresponding AUDUSD futures as you pay away the base rate differential in the hedge anyway. Even better would be boxes on the ASX200 but I don't think there is a market.
Finally, great website @adamhg . I will make sure to check it next time, definitely some room for improvement on my first box! (4400 - 4200 Sep 22 @ 0.65%)