We use the term ‘Renting Stocks‘ as a simplified version for ‘Selling a Call Option’ or ‘Writing a Covered Call’. When options trading is mentioned, people will quite often run a country mile, but we would like to show you an incredible strategy that will not only give you protection in a downwards market, but also increase your profits.

Here is an example to show you how it’s done.

XYZ is trading at $19.97 and lets say we own 200 stocks.
Therefore the cost to purchase the stocks =$3,994
We want to rent them out, so we write a covered call on 200 XYZ stocks
1. Say we choose an exercise price of $20.50 to expire in 4 weeks time
Lets say the premium is $1.20c per stock.
We would automatically be paid $240 into our account. (200×1.20c=240)

This may not sound like much,yet, but how would that look if you had 2000 stocks? And for only 4 weeks.

So, what do you need to do?
2. Call your broker and say: I want to write a covered call on XYZ with an exercise price of $20.50, with a January expiry and a premium of $1.20c.

You have just spent 3 minutes on the phone and received $240 into your account.

This can also be diversified across different stocks that you may already own.

So that’s the basics of the trade. Just to re-cap:

1. Choose and buy stocks

2.Choose a Rental Price

3. Choose a Rental Period

4. Rent them out and receive Rental Payment in Advance

Stay tuned and we will find out what happens at the end of September.