How To Make Money In Stock Market Without Selling Your Shares? (2024)

Let us say you have purchased shares of a blue chip company and the stock has appreciated substantially in the last few years. You can surely book your profits and come out of the stock but you are extremely bullish about that stock and want to hold on to it. Is there any way you can monetize these shares without selling it out. Let us look at 5 such possibilities:

Using the demat value of the shares as margin for trading

This is the simplest method of monetizing your shares without actually selling them. Typically, your broker will allow you to take a margin trading position in the equity or even the F&O segment based on the value of your demat holdings. This is a trading position and hence must be played with strict stop losses and profit targets only. Normally the broker will consider a haircut before giving the margin and the haircut is normally around 50%. That means if the market value of your share holding in the demat account is Rs5,00,000 then you can get a margin up to Rs2,50,000. There is an important aspect here. Ensure that you measure the risk you take on your trading and that you are able to pay up the losses in cash. Else, the broker will sell your share holdings to recover the losses in trading. This is something you need to be extremely cautious about.

Getting a loan against your shares (LAS)

If you don’t want to do trading, you can also get a loan against shares (LAS). Normally, your broker has a tie-up with banks or NBFCs who can give you the loan. The normal haircut is 50% of the market value of the shares. The haircut may be higher in periods of volatility in the markets. When you take LAS, you will have to hypothecate the shares to your lender. There are two risks you need to be conscious of. Firstly, if you fail to repay the loan on time then the financer is at liberty to sell the shares and recover the dues. Therefore, you need to pay the loan on time to hold on to your shares. Alternatively, if the price of the share crashes sharply, then the financer will call for additional margin. If you are not able to put the additional margin then the financer could sell your shares to cover their risk.

Creating cash-futures arbitrage to earn the spread

This is a fairly low risk method of making money out of your shareholdings. The way it works is you sell equivalent futures of the same stock against your cash holding. For example, if you are holding 2,000 shares of Reliance Industries, then you need to sell equivalent futures. There is a catch here. You can create this arbitrage in multiples of the lot size. For example, one lot of RIL is 1,000 shares so only if you hold in multiples of 1,000 shares can you do a cash-futures arbitrage. Typically, the cash-futures spread vary between 0.50% and 0.80% per month. Once the arbitrage is created, the short futures are rolled over each month and the positive roll spread becomes your earning, even as you continue to hold the shares.

Sell higher options to keep reducing your cost of holding the stock

This is a slightly more aggressive strategy, where you sell slightly out of the money call options on the stock which you are holding. This strategy is adopted when you do not foresee a very sharp rise in the price of the stock during the interim period. Hence you will use the call premium earned to reduce the cost of holding of your stock. Remember, this is a risky strategy since there is no protection on the downside. On the upside, normally traders put a stop loss on the short call option in case they do not intend to sell the shares. This strategy is normally followed by HNIs. While the rates of return could vary depending on volatility and market conditions, you need to be wary of the risk in this strategy.

Consider stock lending of these shares

This is a new opportunity that has cropped up for investors. When you are holding on to shares and do not want to sell them, you can look at lending these shares for a fee. The stock lending happens through the exchange mechanism and hence it is entirely risk-free. Also, since the shares are not sold, there are no capital gains implications in this case. Why would investors borrow shares? Typically, traders could borrow shares for two reasons.

They may want to short shares due to a bearish view, but they may not be holding those shares. Since rolling settlements only permit intraday short selling, they can borrow shares and sell them. Secondly, there are others who could have sold shares without delivery and could be looking to avoid auction losses. They are also candidates for stock lending. You can explore such opportunities and strategies using a share market app.

The crux of the matter is that there are a variety of ways to monetize your equity shares without selling them. You can take you pick based on what suits you best!

How To Make Money In Stock Market Without Selling Your Shares? (2024)


How To Make Money In Stock Market Without Selling Your Shares? ›

Using the demat value of the shares as margin for trading

This is the simplest method of monetizing your shares without actually selling them. Typically, your broker will allow you to take a margin trading position in the equity or even the F&O segment based on the value of your demat holdings.

Can you make money on stocks without selling them? ›

Using the demat value of the shares as margin for trading

This is the simplest method of monetizing your shares without actually selling them. Typically, your broker will allow you to take a margin trading position in the equity or even the F&O segment based on the value of your demat holdings.

How much do I need to invest to make $1000 a month? ›

A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.

Can you lose money in stocks if you don't sell? ›

Do You Lose Money When Stocks Drop? When the stock market declines, the market value of your stock investment can decline as well. However, because you still own your shares (if you didn't sell them), that value can move back into positive territory when the market changes direction and heads back up.

How do you lock in stock gains without selling? ›

Covered call options are another way to lock in profits. When you write a call option against a long stock position, you generate premium income that you can use to lower your cost basis. If the stock declines, the premium payments can help offset those losses without selling the stock.

How much money do I need to invest to make $3,000 a month? ›

Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.

How much money do day traders with $10,000 accounts make per day on average? ›

With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].

How to make $5000 a month in passive income? ›

If you like the idea of earning passive income, one idea to make $5,000 per month is to rent out things for money. This is probably the best option if you're very busy with your job and don't have time to start a new side hustle.

How much will I have if I invest $500 a month for 10 years? ›

What happens when you invest $500 a month
Rate of return10 years30 years
Nov 15, 2023

How to make $500 a month in dividends? ›

Dividend-paying Stocks

Shares of public companies that split profits with shareholders by paying cash dividends yield between 2% and 6% a year. With that in mind, putting $250,000 into low-yielding dividend stocks or $83,333 into high-yielding shares will get your $500 a month.

Do I owe money if my stock goes down? ›

No. A stock price can't go negative, or, that is, fall below zero. So an investor does not owe anyone money. They will, however, lose whatever money they invested in the stock if the stock falls to zero.

What is the 3 day rule in stocks? ›

The 3-Day Rule in stock trading refers to the settlement rule that requires the finalization of a transaction within three business days after the trade date. This rule impacts how payments and orders are processed, requiring traders to have funds or credit in their accounts to cover purchases by the settlement date.

What is the 3 5 7 rule in trading? ›

The 3–5–7 rule in trading is a risk management principle that suggests allocating a certain percentage of your trading capital to different trades based on their risk levels. Here's how it typically works: 3% Rule: This suggests risking no more than 3% of your trading capital on any single trade.

Do I pay taxes on stocks I don't sell? ›

Understanding Capital Gains Tax

The tax doesn't apply to unsold investments or unrealized capital gains. Stock shares will not incur taxes until they are sold, no matter how long the shares are held or how much they increase in value.

What is a simple trick for avoiding capital gains tax? ›

An easy and impactful way to reduce your capital gains taxes is to use tax-advantaged accounts. Retirement accounts such as 401(k) plans, and individual retirement accounts offer tax-deferred investment. You don't pay income or capital gains taxes at all on the assets in the account.

Do stocks count as income if you don't sell? ›

You don't report income until you sell the stock. Your overall basis doesn't change as a result of a stock split, but your per share basis changes. You'll need to adjust your basis per share of the stock. For example, you own 100 shares of stock in a corporation with a $15 per share basis for a total basis of $1,500.

Can you buy a stock and never sell it? ›

However, a popular long-term strategy is called a buy-and-hold strategy, which is a passive investment strategy in which an investor buys stocks and holds them for a long period of time.

Can you make money just trading stocks? ›

Yes, you can earn money from stocks and be awarded a lifetime of prosperity, but potential investors walk a gauntlet of economic, structural, and psychological obstacles.

What happens if nobody wants to sell a stock? ›

When there are no buyers, you can't sell your shares—you'll be stuck with them until there is some buying interest from other investors. A buyer could pop in a few seconds, or it could take minutes, days, or even weeks in the case of very thinly traded stocks.

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