It's Not "Share Renting" ferchrissake!

[wayneL]

A rental contract gives the renter possession of the item for a set, or perhaps indeterminate period in return for a fee, often paid in timely instalments.

At the termination of the contract, the item is returned to the owner. The owner does not lose ownership.

A call contract is completely different.

If you own shares and sell a call contract over them, you are not renting your shares out, you are selling the "right to buy" your shares. This confers an obligation on your part to sell your shares if the contract buyer exercises their right.

The call buyer never takes possession of your shares unless he/she exercises the right to buy and effects a transfer of ownership.

Selling options is more akin to selling insurance and has nothing to do with renting.

If you want to look like a nooooob and a muppet, use the term share renting. If not, use the proper terminology.

 

[brty]

Wayne, it is clearly a newly made up term by marketers of products to influence newer customers/suckers in their wares.

I agree completely with your post. I am also fully aware that most of the "newbees" who bring up the term in regard to a new product are not infact new traders, but the marketers themselves touting for business.

Thank you for all the time you spend in correcting the option sucker plays.

brty

 

[skc]

A rental contract gives the renter possession of the item for a set, or perhaps indeterminate period in return for a fee, often paid in timely instalments.

At the termination of the contract, the item is returned to the owner. The owner does not lose ownership.

A call contract is completely different.

If you own shares and sell a call contract over them, you are not renting your shares out, you are selling the "right to buy" your shares. This confers an obligation on your part to sell your shares if the contract buyer exercises their right.

The call buyer never takes possession of your shares unless he/she exercises the right to buy and effects a transfer of ownership.

Selling options is more akin to selling insurance and has nothing to do with renting.

If you want to look like a nooooob and a muppet, use the term share renting. If not, use the proper terminology.

You are way too kind Wayne. The more noobs playing options the better your spread and liquidity, isn't it

 

[village idiot]

apparently it is....according to the latest email from aussie stock forums;


Insure your portfolio and generate extra income!

The old Buy and Hold investment method is like buying property with no insurance.

PortfolioProtect insures your investment and pays for it by getting "rent income" in the door!



How we do it..

The strategy focuses on limiting portfolio risk through the use of insurance options whilst increasing the annual yield by selling derivatives. Sound too complicated? We can help.




ffs

 

[village idiot]

now you really can rent those shares out; this is from interactive brokers. It actually does look worth considering

Earn Additional Yield on Your Fully-Paid Stock
Did you know that you can earn additional yield on stock you own by allowing your fully-paid shares to be loaned out? Many stocks are attractive to traders who want to sell them short, and who therefore need to borrow them. IB's new Stock Yield Enhancement Program earns you extra income on your fully-paid stocks by allowing IB to borrow them from you and then lend them out to other IB customers or in the securities lending market. Every day that your stock is loaned out, you will be paid a loan fee based on market rates. You will pay a percentage of this to IB (currently 50%) as a fee for managing the program.

To find out how easy it can be to earn extra income on your fully-paid shares, see the IB Stock Yield Enhancement Program highlights page.

 

[KurwaJegoMac]

now you really can rent those shares out; this is from interactive brokers. It actually does look worth considering

Sounds great but what happens when you want to sell too? Also why would one want to be holding a stock that others want to short... :S

Good maybe for company directors or people who don't intend to sell for decades I imagine.

 

[wayneL]

now you really can rent those shares out; this is from interactive brokers. It actually does look worth considering

A loooooooooooooooooooong time ago on this forum, I pointed out that this is the only way to "rent" shares; and part of the reason I get so naffed off about CCs being referred to as renting shares.

 

[wayneL]

Sounds great but what happens when you want to sell too? Also why would one want to be holding a stock that others want to short... :S

I imagine there must be a novation process similar to options. So long as there is "stock" of shares to short, you wanting to sell shouldn't effect the original counter-party.

But that is just a guess.

 

[Tysonboss1]

A loooooooooooooooooooong time ago on this forum, I pointed out that this is the only way to "rent" shares; and part of the reason I get so naffed off about CCs being referred to as renting shares.

whats the proper term for this.

 

[wayneL]

whats the proper term for this.

See the quote in post #5

 

[Tysonboss1]

See the quote in post #5

Do you mean this,

" IB Stock Yield Enhancement Program "

I was just after what the general term for it was, just so I could research it more and perhaps find out if my broker does somthing similar.

 

[wayneL]

At last ASIC acts:

http://www.asic.gov.au/asic/asic.nsf/byheadline/11-161AD+ASIC+accepts+‘Aussie+Rob’+EU?openDocument

ASIC found that statements made... were misleading and deceptive. These statements included:

• “Writing covered calls is the same as ‘Share Rental’ or renting out real estate”;
• “Options trading is easy”; and
• “Returns of 5-10 per cent per month and 60-120 per cent per year can consistently be achieved through use of... Share Rental”

 

[mazzatelli]

It's a few years too late, but better now than never!!!

 

[wayneL]

They've nailed 'Aussie Rob' for this, but they never did McIntyre for it, who is the main protagonist of this sort on nonsense.

Even though a positive step, it seems ASIC aren't really on the ball.

 

[mazzatelli]

McIntyre is still around?

I remember a while ago, I saw some of these ads that had Richard Branson come along to McIntyre shows/seminars/events.

Star power bamboozling people, ASIC included?

 

[builder2818]

McIntyre is still around?

I remember a while ago, I saw some of these ads that had Richard Branson come along to McIntyre shows/seminars/events.

Star power bamboozling people, ASIC included?

He's still hanging around with Richard Branson seminars this year. Everyone's favourite share renter gets a write up today in the SMH:

http://www.smh.com.au/business/delving-into-the-dark-side-of-shadow-brokers-20110812-1iqsz.html