In late 2021, as the housing market overheated and the Federal Reserve’s benchmark interest rate hovered near zero, Tony Yang found an unconventional way to fund his down payment.
He logged into his Charles Schwab brokerage account, built a trade he’d discovered on Reddit — and unlocked about $650,000 to help finance a Bay Area home.
The trade, dubbed a “box spread,” carried a kind of mystique. By combining two opposing options positions — one bullish, one bearish — Yang built a strategy that mimics a fixed-rate loan: upfront cash now, repayment at a set date, and a locked-in cost in between.Yang used it to borrow at just 1.6% for five years — well below the rate on his traditional mortgage — creating a down payment without having to sell assets he wanted to keep in the market.
“The stock market was doing really well in 2021, and I felt it was a bad time to sell to make the down payment in cash,” said Yang, who was working for payments company Stripe Inc. at that time. “Borrowing against it keeps me in the market and avoids capital gains tax.”
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