# High yield with box spreads
**URL:** https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550
**Category:** Investing / Others
**Created:** [April 24, 2024, 2:19pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550 "2024-04-24T14:19:58Z")
**Posts on this page:** 20
**Page:** 1
### Author:  [@ma0](https://forum.mustachianpost.com/u/ma0)
#### Post date: [April 24, 2024, 2:19pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/1 "2024-04-24T14:19:58Z")
I’ve recently read this article and was wondering if it’s applicable in switzerland
> **[Looking for high-yield CDs? Consider an Option "Box Spread" as a...](https://earlyretirementnow.com/2024/04/17/box-spread-as-high-yield-cd-alternative/)**
>
> Box Spreads can provide a high-yield and tax-advantaged alternative to CDs and money market accounts. Here's a step-by-step guide.
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### Author:  [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)
#### Post date: [April 24, 2024, 3:14pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/2 "2024-04-24T15:14:45Z")
Isn’t this what the BOXX ETF does?
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### Author:  [@ma0](https://forum.mustachianpost.com/u/ma0)
#### Post date: [April 24, 2024, 3:32pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/3 "2024-04-24T15:32:57Z")
Yes it is. That’s also what BigERN says.
I was wondering if you can do it in chf though.
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### Author:  [@nabalzbhf](https://forum.mustachianpost.com/u/nabalzbhf)
#### Post date: [April 24, 2024, 4:10pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/4 "2024-04-24T16:10:19Z")
If you really know what you’re doing, probably (there’s a market for SMI@EUREX that should behave as expected)
I tried looking into it back when BOXX was in the news last year, it seemed very non trivial to do, esp given you can’t blindly trust the posted prices on IB unlike with regular stocks trade, you have to know the underlying options maths to know which price you want to have in your options legs, which I’m way too lazy/scared to do.
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### Author:  [@Helix](https://forum.mustachianpost.com/u/Helix)
#### Post date: [May 1, 2024, 11:42am UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/5 "2024-05-01T11:42:39Z")
> [@PhilMongoose](#):
>
> BOXX ETF
“Doesn’t look like anything to me.” And again I look right past useful information. 🙃
This is " Alpha Architect 1-3 Month Box ETF", getting 1-3 Month Treasury Bill returns as capital gains. Theoretically tax free in Switzerland, and no WHT in the USA.
**Links:**
- [Fund Website](https://etfsite.alphaarchitect.com/boxetf/)
- [Good Article on Seeking Alpha](https://seekingalpha.com/article/4668280-boxx-revisiting-box-spread-etf-as-a-cash-management-tool)
- [ICTax 2023 (0 taxable return)](https://www.ictax.admin.ch/extern/en.html#/security/123430228/20231231)
**Caveats:**
- If I understand correctly, they don’t intend to do distributions. But if they are forced to by RIC laws, they expect most to classify as capital gains.
- The ETF rolls options. I imagine the Swiss tax authorities could look at this, see it as explicitly designed to avoid taxes, and try to slapp you with professional trader status for it. And sooner or later they will find a way to close this loophole.
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### Author:  [@nabalzbhf](https://forum.mustachianpost.com/u/nabalzbhf)
#### Post date: [May 1, 2024, 2:29pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/6 "2024-05-01T14:29:46Z")
> [@Helix](#):
>
> I imagine the Swiss tax authorities could look at this, see it as explicitly designed to avoid taxes, and try to slapp you with professional trader status
Extremely unlikely, they might make you pay capital gain tax though.
That’s how the Leonteq synthetic short term rate fund is taxed.
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### Author:  [@Tony1337](https://forum.mustachianpost.com/u/Tony1337)
#### Post date: [May 1, 2024, 2:52pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/7 "2024-05-01T14:52:37Z")
> [@Helix](#):
>
> The ETF rolls options. I imagine the Swiss tax authorities could look at this, see it as explicitly designed to avoid taxes, and try to slapp you with professional trader status for it. And sooner or later they will find a way to close this loophole.
They will GUARANTEED not slap you with professional trader status for merely getting some tax free interest on your cash.
At MOST (and it does seem likely eventually) they will simply invent a virtual didvidend, like with accumulating etfs, and 1:1 make the appreciation as interest gained. Like with accumulating money market funds. Which would immedietaly make a regular t-bill etf more attractive again (less cost). But ultimately not attractive still as a swiss investor, as it‘s not CHF (except for making fx bets, which is market timing essentially).
For now BOXX is attractive as a swiss investor, due to the tax freeness, which considering interest rate risk parity, gives you an advantage over CHF money market equivalents. At least in my opinion.
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### Author:  [@Helix](https://forum.mustachianpost.com/u/Helix)
#### Post date: [May 1, 2024, 4:31pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/8 "2024-05-01T16:31:49Z")
> [@nabalzbhf](#):
>
> Leonteq synthetic short term rate fund
Do you have a link to the product page or an ISIN? I can’t seem to find this.
> [@Tony1337](#):
>
> invent a virtual didvidend, like with accumulating etfs
If I understand correctly, they just look inside and tax you on any interest or dividend they can find. There are no such things in BOXX. Gains (and losses) from derivatives are explicitly tax-free.
But you are right, they also invented interest on bonds without (or not enough) coupons.
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### Author:  [@nabalzbhf](https://forum.mustachianpost.com/u/nabalzbhf)
#### Post date: [May 1, 2024, 4:53pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/9 "2024-05-01T16:53:25Z")
> [@Helix](#):
>
> Do you have a link to the product page or an ISIN? I can’t seem to find this.
> **[Exchange Traded Product on Leonteq CHF Overnight Return Index | CH1283546716...](https://structuredproducts-ch.leonteq.com/isin/CH1283546716?language_id=1)**
>
> Exchange Traded Product on Leonteq CHF Overnight Return Index | CH1283546716 | CHFO
it’s taxed as capital gain (not as synthetic dividend, it’s taxed when you sell)
That sounds pretty similar to what boxx does from tax people perspective.
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### Author:  [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)
#### Post date: [May 1, 2024, 4:55pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/10 "2024-05-01T16:55:06Z")
> [@Helix](#):
>
> But you are right, they also invented interest on bonds without (or not enough) coupons.
Return on zero-coupon bonds are accounted for as interest under accounting rules.
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### Author:  [@Tony1337](https://forum.mustachianpost.com/u/Tony1337)
#### Post date: [May 1, 2024, 5:28pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/11 "2024-05-01T17:28:46Z")
That‘s actually pretty good then, as the return is tax deferred. If this will also be the case for Boxx, then it would definitely keep it interesting.
How do you report it in your taxes?
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### Author:  [@nabalzbhf](https://forum.mustachianpost.com/u/nabalzbhf)
#### Post date: [May 1, 2024, 5:29pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/12 "2024-05-01T17:29:28Z")
I don’t use it at the moment. I assume you’d report like any other security.
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### Author:  [@Helix](https://forum.mustachianpost.com/u/Helix)
#### Post date: [May 1, 2024, 9:41pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/13 "2024-05-01T21:41:10Z")
> [@nabalzbhf](#):
>
> it’s taxed as capital gain
Finally found the section where it states so in the “termsheet” of CHFO ETP. On the third page under “TAXATION SWITZERLAND” it states:
> [@](#):
>
> **Swiss Federal Income Tax (for private investors with tax domicile in Switzerland)**
>
> For Swiss income tax purposes the Product is subject to the so-called pure difference taxation (“reine Differenzbesteuerung”). Hence, for private investors with tax domicile in Switzerland holding the Product as part of their private property, any gain realized upon a secondary market transaction or at redemption is subject to income tax. The taxable gain/income is the positive difference of the sales price\* or redemption amount\* and the purchase price\* of the Product.
>
> The tax treatment regarding the cantonal and communal income taxes can differ from the tax treatment regarding the Federal Direct Tax. But in general the income tax treatments are corresponding.
>
> \* each to be converted into CHF at the prevailing exchange rate on the purchase date, the sales date or the redemption date.
The “Differenzbesteuerung” led me back to [“Besteuerung von Obligationen, Derivaten und kombinierten Produkten” (German)](https://www.estv.admin.ch/dam/estv/de/dokumente/estv/steuersystem/dossier-steuerinformationen/f/f-finanzinstrumente.pdf.download.pdf/f-finanzinstrumente.pdf) of the ESTV.
I think the CHFO ETP is a Chapter 4.3.2.2 (“ **non-transparent** product” of “non-traditional warrant and convertible bonds and capital-guaranteed derivatives”).
The BOXX ETF on the other hand seems to be a 4.3.2.1 (“ **transparent** product” of “non-traditional warrant and convertible bonds and capital-guaranteed derivatives”). As such the bond and option parts are taxed seperately. But BOXX only has options and option premium is not taxed.
Alternatively, since there is no bonds involved (and therefore it maybe is not 4.3.2.1), they could just look inside. They will still just see the options, which are still just tax-free.
**tl;dr:** BOXX and CHFO are not the same for the taxman. BOXX gains should be tax-free, since option premiums are tax-free.
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### Author:  [@lsnguy](https://forum.mustachianpost.com/u/lsnguy)
#### Post date: [February 26, 2025, 10:25am UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/14 "2025-02-26T10:25:53Z")
hello! i have some cash to park that I intend to use later this year as part of my DCA strategy. I was thinking of using BOXX etf to get some interest on the cash while it is sitting idle in my IB account.
I am not sure how would this work for let’s say a period of 3 months - if I buy the ETF on 1 March and sell it on 1 June, would I be credited with 1.25% interest (5% prorated for 3 months)?
and reading through the discussion, it seems that these gains would be tax free and there might not even be a requirement to report this transaction if I do not hold these instrument on 31 December 2025.
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### Author:  [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)
#### Post date: [February 26, 2025, 10:34am UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/15 "2025-02-26T10:34:16Z")
The price of the ETF should increase by about 1.25% during that time so when you sell, you make a gain.
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### Author:  [@adenozin](https://forum.mustachianpost.com/u/adenozin)
#### Post date: [March 3, 2025, 8:03pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/16 "2025-03-03T20:03:59Z")
I really like BOXX and use it for parking cash for 1-2 years including deferred tax payments (I am fine with the FX risk). What are the idiosyncratic risks of BOXX? If you look at the chart carefully, there are some minor drawdowns every once in a while. Is that option-risk related?
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### Author:  [@Helix](https://forum.mustachianpost.com/u/Helix)
#### Post date: [March 3, 2025, 8:10pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/17 "2025-03-03T20:10:57Z")
No, idea. Did you see this Bogleheads thread?
> **[Why is BOXX down today? - Bogleheads.org](https://www.bogleheads.org/forum/viewtopic.php?t=436828)**
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### Author:  [@adenozin](https://forum.mustachianpost.com/u/adenozin)
#### Post date: [March 3, 2025, 8:17pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/18 "2025-03-03T20:17:18Z")
Nice thread, thanks for sharing. Looks like its indeed short term liquidity issues causing the drawdowns.
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### Author:  [@gaijin](https://forum.mustachianpost.com/u/gaijin)
#### Post date: [August 17, 2025, 6:32am UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/19 "2025-08-17T06:32:49Z")
Taking up the discussion from [here](https://forum.mustachianpost.com/t/mortgage-rates-in-switzerland-2025-edition/15453/425).
Anyone having their own experience with box spreads in CHF?
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### Author:  [@1742](https://forum.mustachianpost.com/u/1742)
#### Post date: [August 17, 2025, 2:18pm UTC](https://forum.mustachianpost.com/t/high-yield-with-box-spreads/12550/20 "2025-08-17T14:18:27Z")
> [@gaijin](#):
>
> Anyone having their own experience with box spreads in CHF?
Did it once during the stay at home boredom, just for the fun of it. Positive: It works. Negative: It’s a bloody awful lot of work and absolutely not worth the effort, at least in CHF and at Swissquote (I believe IBKR would remove the biggest issue, allowing you to setup the entire strategy at once instead of manually trading the required options).
Edit after reading [BigERN](https://earlyretirementnow.com/2021/12/09/low-cost-leverage-box-spread/) (as linked by @Tony1337 ): If you know what you are doing, triple checking everything, this should be relatively easy to do with his step-by-step guide at IBKR. When I say relative, I should point out that I believe it took me some 6 hours those years ago at Swissquote to understand the strategy, select the options, watching the current trading to figure out appropriate limits for a possible trade, and actually exercising that one trade… Option Volatility & Pricing by Nathenberg put me up to it (and many other exotic trades) for anyone interested.
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