Are there any brokers/banks which offer such product?
For example, you buy $1000 of AAPL with your own cash.
Then you borrow $500 on margin and take $500 out of this account as cash. You pay low interest rate on $500(slightly higher than treasury rate)
Then AAPL drops by 60% and your account is now worth $400.
Interest on high beta stocks will be lower than interest on low beta stocks. Since all users are selecting stocks more or less randomly, in total they will approximate SPX.
Most brokers would have issued a margin call, but hybrid loan would provide $400(fully collateralized at low interest) + $100(unsecured at relatively high interest but still much lower than credit cards because broker will be able to buy SPX puts against multiple portfolios at the same time to limit their own risk). With interest calculated daily depending on price of the portfolio.
And your account will be able to go into negative up to approved limit of your “line of credit” before getting margin called, or whatever it is called.
Once you get into negative territory, you have to start mandatory monthly payments to cover interest + some of the principal.
Does something like this exists in the wild?
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