Box spread borrowing costs are set by the options market, not a bank, and they track the U.S. Treasury curve. The benchmarks below refresh every business day.
Benchmark curve as of October 16, 2026
| Term | U.S. Treasury par yield |
|---|---|
| 1 Year | 4.46% |
| 2 Year | 4.74% |
| 3 Year | 4.82% |
| 4 Year | 4.85% |
| 5 Year | 4.89% |
Source: U.S. Treasury daily par yield curve. Implied box spread borrowing rates on broad index options typically price within a few tenths of a percent of these yields; the exact rate depends on term, market conditions, and execution. These are benchmarks, not quotes.
A box spread is a loan built from S&P 500 index options: cash today, one fixed repayment at expiration. Because arbitrageurs compete to earn the risk-free rate on the other side of the trade, the implied borrowing rate tracks the Treasury yield of the matching maturity. Pick your term above, and the number next to it is approximately the market's wholesale cost of money for that period. That, give or take a small spread, is the rate a well-executed box prices at.
Compare that to what banks charge against the same collateral. Securities-backed lines of credit typically run several points above Treasuries, variable. Margin loans run higher still. The box spread removes the middleman, which is the entire point.
There is no loan officer in a box spread. The four option legs create a fixed payoff at expiration, so whoever buys the other side is simply lending at the implied rate. Index arbitrage desks do this at scale, competing with each other, and that competition pins the rate to Treasuries. A bank's rate committee never enters the picture. That is why the table above, a public government data feed, is a working benchmark for what this financing costs.
On $1,000,000 borrowed for a year, each percentage point of rate is $10,000. A borrower refinancing a 7.5% SBLOC into a box priced near the 1-year benchmark above keeps the difference, every year, on the same collateral. The complete guide walks through the mechanics, the risks, and who this does and does not fit, and the tax treatment is its own story: the financing cost generally books as a capital loss, which may offset gains regardless of what the money bought.
The options market. The implied rate is set by arbitrageurs competing to earn the risk-free rate, so it tracks U.S. Treasury yields of the same maturity, typically within a few tenths of a percent. No bank sets or marks up the rate.
Fixed. The rate locks the moment the trade executes and does not change for the life of the position, whether that is 30 days or several years. SBLOC and margin rates are variable and move with the bank's reference rate.
Historically, implied box rates on broad index options have landed within a few tenths of a percent of comparable-maturity Treasuries. The exact spread varies with term, market conditions, and execution quality.
The financing cost is generally treated as a Section 1256 capital loss rather than interest expense, which may offset capital gains regardless of how the money is used. Tax treatment depends on your circumstances; consult your tax adviser.
For informational and educational purposes only. Benchmark yields are published by the U.S. Treasury and change daily; implied box spread rates are not guaranteed and depend on market conditions and execution. Borrowing against securities involves leverage and risk, including the risk of loss greater than anticipated. This is not an offer of credit and not personalized tax, legal, or investment advice.
Benchmarks are the starting point. Send your current SBLOC or margin statement and we will quote a box spread next to it: the rate, the annual difference in dollars, and the tax treatment.
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