Surya

Can ETF Options Offer Cheap Leverage to Reliably Boost Returns?

Jordan,

What you have discovered is the basis behind valuation of options (risk-free abritrage). You can sythetically create an option by borrowing money and buying stock with the leverage. As Kapil1022 and Kyle pointed out above, your cost of debt would be effectively lower because of dividends you receive on SPY. Try the same analysis on a stock that has no dividends.