Back-testing has shown that most of the gain on SPY occur during after hours, and that buying at close and selling at open every day would yield a greater return than buying and holding over the same time period. I understand that each of these daily trades would create a taxable event, but my question is regarding the use of margin for this strategy.
Margin rate (currently using RH for lowest rates) compounds daily on settled trades. My question here would be- does that mean that if I buy at close and sell at open (trade would not have settled at this point) will I avoid margin interest all together? Does interest not start accruing until the trade is settled and the margin balance is still being used, or will 1 day of interest accrue for the amount of margin used overnight once the trade does settle?
If interest wasn't accrued for these trades, it seems like an ok strategy to keep your buy and hold stocks and use the margin leverage to help generate income based on a buy at close sell at open strategy.
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