This is How the Super Wealthy Make Money with Stock Buying Secrets
Simple stock buying secrets are not difficult and the rich use them daily.
Did you know that savvy investors RENT OUT their stocks every month to generate possible HUGE returns on their investment?
Naturally, when they do RENT OUT their stocks, they usually do not call it renting: The term they like to use is a “covered call.” This concept is when you sell an option to another investor to buy your stock at an agreed-upon figure. This is often called a strike price.
Now, why on earth would you want to rent out your stock?
Here is an example of stock buying secrets and this is how this one will work: Let’s say bought 1,000 shares of a company a few months or years ago for $20, and the stock has increased in price, but now seems to be stuck in a range, hovering around its current price of $24. It does not hurt you to own the stock. But it’s not doing much.
A bullish investor might pay you $24,000 to buy the shares from you on the open market. Or he could buy 10 call options for $2 per share, or $2,000 total investment. Each call option gives the right but not the obligation to buy 100 shares of the stock by a certain date at a specific price.
As the days go by . . .
The value of the call options will usually rise and fall with the value of the stock. So if that stock hits $27, the investor can use the option and buy all the stock or can just sell the option without ever owning the stock.
So if that investor bought October $25 calls for $2, they could now be worth $3.50 each, or $3,500. That’s a nice profit of $1,500 on a $2,000 investment.
It is essential that you know, every day that passes toward the option’s expiration day means these options become worth a little less money. If that stock goes down, the options become worthless, and the total investment of $2,000 could be lost.
If the stock rises to the strike price of $25 or higher, you will probably be called, which means you have to sell your stock at $25, which is not terrible because you bought it for $20 — plus you received $2,000 for the option. If that stock does not make it to $25, then you keep the $2,000 and the stock.
You could sell the next month’s call option at $25 for maybe another $2,000 — or sell a call further into the future for more money. This could be a great strategy if you are long (meaning you already own it). But it might not be optimal. After all, if you bought the stock at $20 and think it’s heading toward $40, then it would not be advisable to sell it at $25.
Stock buying secrets are many, but should almost never buy a stock just to sell the call. You should like the stock on its own value, because if you buy it to sell a call, and the stock tanks, you could still lose much of your investment, regardless of the extra you could make on renting it out.