Here’s another one form Amber Hestla a few weeks after the Hestla’s Heists teaser ad. Well, she says that we could rent our shares, while we collect dividend income from the stocks.
Hiring out our shares without selling them is of course intriguing if she literally means that.
So what is she talking about – a few quotes from her ad…
The stocks in your brokerage account can also generate monthly income, much like a rental property. But you’re probably not taking advantage of this.
Consider for instance, that if you owned a $150,000 apartment in Boston, Houston or Seattle… depending on the neighborhood, you’d collect about $1,400 a month in rent.
Likewise, if you owned only $80,000 worth of stock in companies like Apple, Facebook and Intel… you could essentially do the same thing and collect $1,400 a month on them.
The best part is this income is in addition to the dividends these stocks already pay you.
Let me quickly break the ice- this is kind of foofaraw for selling her Maximum Income newsletter service as this is not anything but an options selling strategy – she compares her trades to renting of shares which is true to some extent.
Hestla has been pushing options trades constantly for her Income Trader newsletter and this is not anything new for most of you, but I have been receiving requests from my readers so I will try to decode.
I have discussed her trades in my recent write-up about “Hestla Heist” specifically she is touting her recommendations (covered calls) here. And it’s like renting out shares we already own. I would like to warn you that this is mystifying and dangerous if levered heavily although not all companies allow trading of options contracts but a few larger companies do have options trading available.
And this is confusing for newbie investors as it uses a very different glossary of terms; however the basic idea is the same that you own a particular stock and you’re agreeing to sell someone the right to buy that stock at a particular price after a defined period of time and this right is mainly sold as an options contract.
Here’s a list of the terms you probably need to get accustomed to if you are planning to trade in options contracts.
1. Strike price
2. Expiration date
3. In the Money
4. At the Money
5. Out of the Money
6. Time value
7. Open interest
I have covered this in my earlier write-ups in detail for those of you who want to know more here’s the link, also here, and there are lots of other things that a newbie investors need to know very thoroughly before taking a plunge in the Options Trading realm. Or simply Google the terms you have the requisite information in abundance.
Furthermore you need have at least 100 shares to sell a covered call options contract but again it depends on the brokerage you use since your shares are for covering your obligations as an option seller. And almost all options contracts are for a minimum of 100 shares so the quoted price for the contract is typically multiplied by 100.
By the way you need to be quite invested by owning the stocks – for selling covered calls to make anything between $1000 and it needs diligence and constant monitoring be aware it’s simply not a part time job.
If you have any of your own musings on renting of stocks or this sales flyer do share them with us. I would love to hear from you.