When and why you should use margin for trading #SPACs (a thread):
- Margin for SPACs with quality target near NAV (between $10-11), requires DD on your end
- Margin interest rate of 9% a year (example) comes down to ~0.025% per day. For a 10k investment you pay $2.5 dollars a day

- If you know the timeline of catalysts (merger date, product announcements, etc.) you can enter near NAV less than a month before merger, reducing margin interest costs
- The closer to NAV the better to reduce downside or SPAC liquidation risk ($10.3ish redemption)

- Downside is $10.3ish with highly unlikely liquidation
- Upside is $12+ for even the most boring mergers. The upside is highly correlated with the industry that the merger is in. The dream is a SPAC with high growth (EV and tech) target near NAV

- Most of the high growth SPACs are bid up and carry far more downside risk so be careful
- Don’t be afraid of less sexy SPACs with targets not in tech, they can and will still run simply on merger catalyst, though do your research before as always

- To profit from this trade on margin you have to beat the $2.5 dollars per day margin interest cost
- Assuming you hold $10k worth of shares for 1 month, that’s $75 or 0.75%
- SPAC near NAV with quality target will easily beat 0.75% return, ofc the challenge is finding these

TLDR, safe trading with margin for #SPACs:
- Buy SPAC with quality target near NAV ~1 month from merger close
- Just have to beat the margin interest cost, which is below 1% a month in almost all cases
*Remember to sell before or day of ticker change to avoid downside below $10