The stockbrokers term for renting stocks is called “Selling A Call Option” but for now, we will just call it renting stocks to make it easier to understand. When we buy shares or stocks, we have many options other than just sitting on them and waiting for the stock price to rise (most people think that is all there is to stocks!!).
What we can do with our stocks is rent them out, think of it like this… if you own a house, you are the landlord and you can rent your house out to someone at a price that is determined by you. You can do almost exactly the same thing with the stocks you own. As stock landlords, we get to determine the price that we want to rent our stocks out for, and we also choose the amount of time we want to rent our stocks out for.
An Example Of A Renting Stocks Trade…
Buy Stocks
The first thing we need to do if we want to make some money by renting out our stocks, is to actually buy some!! So lets say we buy 1000 stocks with the company we will call ABC. These stocks cost us $10 per share, making the total cost to us $10,000. Once we own these stocks, we can then think about producing an income by renting those 1000 stocks out. With Planet Wealth you have the luxury of being able to buy the exact stocks that we buy (at the same time we buy them!) this takes the guess work out of it for you.
Choose The Rental Price
What we need to do now is choose a price that we want to rent our stocks out for. We generally choose a price that is higher than the price we paid for the stocks, for this exercise let’s say that we choose to rent our stocks out for $11 each.
Choose How Long We Want To Rent The Stocks For
When we decide to rent out our stocks, we get to choose the rental price and also the amount of time we are prepared to rent our stocks out for. With our Renting Stocks Strategy, we generally try to rent out our stocks every month, so for this example we will use a 4 week rental term.
So, for this example we have bought our stocks for $10 and rented them out for $11 for a period of 4 weeks, this means that we have received $1000 in rental premiums. This money will be deposited into our account the very next day, once we have told our broker to rent our shares out (this can also be done for you automatically using the “Auto Trader” service). This money is ours to keep regardless what happens to the price of the stock in the 4 week period.
Renting Stocks Strategy Overview – 4 Simple Steps
- Choose and buy your stocks
- Choose your rental price
- Choose the rental period
- Rent them out and receive your rental income
Planet Wealth founder Andrew Dimitri explains the Renting Stocks strategy further…
Watch out for our next post on what happens next…
Stock Market Investing Strategies and Market Speculation by..
Scott Smith
Investing The Stock Market © 2008 – 2010
Nice strategy. Planet wealth seems to be the surefire way to renting shares. Thanks for this article Scotty
Sean Rasmussen’s last blog post..Mindset Mastery 67 – Desire Pays Dividends
@Sean Rasmussen – No problem for the article, glad you liked it
@jennenzl – You certainly are welcome to be a regular here, there is a lot to learn about different stock market strategies and investingthestockmarket.com aims to teach just that!