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Earn extra income from your share portfolio

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  • Earn extra income from your share portfolio

    Check out this article -

    Did you know you can use shares that you already own, or are about to purchase, to generate cashflow in addition to regular dividends? This can be done by selling call options against your shares. By selling a call option you are giving the option buyer the right to purchase your shares at a predetermined price.

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  • #2
    is it possible to borrow agaist shares?


    • #3
      Howdy spongebob

      Not sure if you remember the 87 sharemarket crash, but lots of banks had lent money secured by shares that ended up being worthless after the crash, so the banks lost heaps of money.
      Since then using shares as security has not been so common.

      I would ask your bank or lender if they would accept share security.

      I would expect that some would accept blue chip stock but wouldn't lend as much as they would if a house was offered as security.

      Maybe asking your sharebroker would also be an idea
      Cheers WildWest

      In victory, you deserve Champagne, in defeat, you need it. - Napoleon


      • #4

        I do not think the NZ share market is developed enough to even have an options market!. Although I do recall the frenetic activity in the futures market (all 6 or 7 traders) in 1987 (now where did they go again) on Queen st next to the trading floor – and I remember seeing the chalkies too alas.

        It is not creating additional cash flow per see. It is securing a level of cash flow (the premium) from the counterparty who believe a certain event may/may not occur ie the share price may go up or down. Should the counterparty call your option than your shares will also go (not necessarily - but lets not go there)

        Options are very complex instruments and I would never suggest the average investor sell a naked call (where you do not own the shares already). Selling options can be well worthwhile but unless you have a USA based portfolio or large Australian Companies forget it the liquidity is too low.

        My advice - options trading is for suckers and pro’s