# Buying With Leverage

> The leveraged buy turns your USDC into a larger stock position in one step, financed by a 0% loan. Leverage is usually paid for by the day.

Canonical: https://spout.finance/docs/buying-with-leverage/

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The leveraged buy turns your USDC into a larger stock position in one step, financed by a 0% loan.

## Why hold leverage here

Leverage is usually paid for by the day. At a published margin rate of 12.075% a year (Schwab and Fidelity, balances under $25,000, broker rate pages, 13 October 2026), borrowing $10,000 for a year costs about $1,208 in interest before compounding, whatever the stock does. A perpetual future charges funding instead, at a rate that moves with demand.

On Spout the loan is 0%, so a leveraged position held for a year carries no interest at all. What you give up is the move above the strike in a cycle where calls are exercised. What Borrowing Really Costs You explains it in full.

That makes the leveraged buy suited to positions you plan to hold. For a trade you open and close within a day, financing barely matters anywhere.

## How it works

You pick an amount and a leverage level from 1x to 1.98x. In a single transaction that you sign, the protocol:

- Borrows the extra USDC from the lending pool at 0%.
- Buys the tokenized stock at the issuer's quoted price with your USDC plus the borrowed USDC.

- Deposits the stock as your collateral and opens the loan.

If any step fails, the whole transaction reverses and nothing happens.

## Why 1.98x and not 2x

At the 50% maximum LTV, the most leverage possible is 2x. The cap sits slightly below that because the issuer's quoted price and the price Spout uses to value collateral can differ a little. The small margin stops a new position from opening above 50% LTV.

## The leverage table

For every $1,000 you put in. The last three columns show how far the stock can fall before liquidation on GLD (54.1% threshold, the lowest), NVDA (58.8%, a middle one) and MSTR (62.5%, the highest).

| Leverage | Stock bought | Loan | Starting LTV | GLD can fall | NVDA can fall | MSTR can fall |
| --- | --- | --- | --- | --- | --- | --- |
| 1.00x | **$1,000** | **$0** | **0%** | None | None | None |
| 1.25x | **$1,250** | **$250** | **20.0%** | **63.0%** | **66.0%** | **68.0%** |
| 1.50x | **$1,500** | **$500** | **33.3%** | **38.4%** | **43.3%** | **46.7%** |
| 1.75x | **$1,750** | **$750** | **42.9%** | **20.8%** | **27.1%** | **31.4%** |
| 1.98x | **$1,980** | **$980** | **49.5%** | **8.5%** | **15.8%** | **20.8%** |

High leverage leaves very little room on the steadiest assets, because their thresholds sit closest to 50%. At 1.98x on GLD, an 8.5% fall starts a liquidation.

## Leverage magnifies both directions

Your gain or loss on the money you put in is roughly the stock's move times your leverage. At 1.5x, and if no calls are exercised, a 10% rise in the stock is about a 15% gain on your $1,000; a 10% fall is about a 15% loss. Because there is no interest, a flat stock costs you nothing.

## After you buy

The position is an ordinary borrowing position. You can repay, add collateral, borrow more up to 50% LTV, or withdraw once the collateral has been through one options cycle and its tokens are back in the pool.