Leasing Stocks – Is it possible to rent stocks?
Leasing is rapidly becoming one of the most talked about stock market investment strategies. More and more investors are seeking to generate income from their stocks and capital from asset growth. But what is a shared lease? Is it legal, anyone can do it? Let us look at the basic concept of rental stocks to see whether this investment strategy is that everyone should look at.
Leasing stocks are rapidly becoming one of the most talked about securities market investment strategy. More and more investors are seeking to generate income from their stocks and capital from asset growth. But what is a shared lease? Is it legal, anyone can do it? Let us look at the basic concept of rental stocks to see whether this investment strategy is that everyone should look at.
Leasing a stock is very similar to renting your property. The basic tenancy policy is as follows:
Step 1 / Purchase of a stock. If you are in Australia, you will need to buy a large number of 1000, while in the United States you can buy a large number of 100.
Step 2 / sell a month option, a strike price out of money Step 3 / Step 4 / This will depend on the stock price at the end of the month, such as going to the beach, watching the foot, etc.
100 shares (1000 shares in Australia) involve Step 2. A call is sold for 100 shares, for example, if you buy a call, you actually buy 100 calls.
What is a call option? A call option gives the buyer the right to buy a certain amount of stock at a predetermined price on or before the scheduled date, but has no obligation
For example, Lets said that the stock ABC traded at $ 100 and someone bought a $ 105 Call options lasted for a month. This will give them the right to buy ABC for $ 105, regardless of the actual price of ABC at any time of the following month. In order to get this right, the person who buys the phone needs to pay the premium to the seller
This is where we come in. The people who rent their shares are paid by the person who buys the call option. Therefore, we assume 100 US dollars to buy 100 shares of ABC shares. The next thing we have to do is sell an overlay phone (it's called coverage because we actually own the stock) at $ 105. We always want to sell a call (beyond the actual price of the stock). Why, if we are forced to sell our stock, we will at least be forced to make a profit. For a phone call sold for $ 105 a month, we may receive a share price of about 3-6%. So in this case, suppose we receive $ 5 per share
I believe you do not need any help Step 3, but you might wonder why we can simply forget our shares, not monitor them every day. The answer is simply because we do not care much about whether their share price is rising or falling. why?
Share prices rise over $ 105 to $ 108
We will see if the stock rises, falls or sideways, is forced to sell our stock $ 105, although their actual price is $ 108. It sounds like a very bad result, but if you take a closer look it is actually a great result. We bought our stock $ 100, sold them for $ 105, and also got paid $ 5 a month. So we actually made a profit of $ 10, and if we just bought the stock instead of renting them, we would only get $ 8.
We will keep our stock because no one will pay $ 105 for the stock, which can be traded on the open market On to buy 100 dollars.
Once again, we will keep our shares. If we do not rent out our stock, we will lose $ 5, but because we receive a $ 5 premium, we will not actually cut a penny.
So, you can see that leasing stocks is actually a safe wealth creation strategy. In fact, what you are doing is trading your potential, earning a huge income within a month and regular monthly income. Which one is better? If you average your percentage return from a lease in a year, you may be surprised at its efficiency. Stock leasing returns generally fluctuate from 20-80% per annum. Average about 40% – better than bank interest I'm sure you'll agree