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? ›

You can make money in stocks by opening an investing account and then buying stocks or stock-based funds, using the "buy and hold" strategy, investing in dividend-paying stocks and checking out new industries. NerdWallet's ratings are determined by our editorial team.

Can you make money on stocks without selling them? ›

Many long-term investors hold on to stocks for years, without frequent buying or selling, and while they see those stocks fluctuate over time, their overall portfolio goes up in value over the long term. These investors often own stocks through mutual funds or index funds, which pool many investments together.

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.

Can we take only profit without selling stock? ›

Yes — holding a stock for a long term that grows over a long term is a winning strategy. As Will Rogers once said, “Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it.”

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

On average, day traders with $10,000 accounts can make $200-$600 per day, with skilled traders aiming for 2%-5% returns daily. So, it is possible to achieve a daily profit of $200 to $600 with a $10,000 account.

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.

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.

What is the 3 5 7 rule in stocks? ›

What is the 3 5 7 rule in trading? A risk management principle known as the “3-5-7” rule in trading advises diversifying one's financial holdings to reduce risk. The 3% rule states that you should never risk more than 3% of your whole trading capital on a single deal.

Do I owe money if my stock goes down? ›

Do I owe money if a stock goes down? If a stock drops in price, you won't necessarily owe money. The price of the stock has to drop more than the percentage of margin you used to fund the purchase in order for you to owe money.

Has a stock ever come back from $0? ›

Can a stock ever rebound after it has gone to zero? Yes, but unlikely. A more typical example is the corporate shell gets zeroed and a new company is vended [sold] into the shell (the legal entity that remains after the bankruptcy) and the company begins trading again.

How long does it take to make money from stocks? ›

When you invest in the stock market, it may take you at least a year to make money if you pick a solid blue-chip stock. This is essentially a stock of a large-cap company that rides market volatility, then earns you good rewards.

How to 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.

Why hold stocks forever? ›

Long-term stock investments tend to outperform shorter-term trades by investors attempting to time the market. Emotional trading tends to hamper investor returns. The S&P 500 posted positive returns for investors over most 20-year time periods.

What is the 11am rule in trading? ›

The logic behind this rule is that if the market has not reversed by 11 am EST, it is less likely to experience a significant trend reversal during the remainder of the trading day. This is particularly relevant for day traders who typically close out their positions before the market closes at 4 pm EST.

Can you make $200 a day day trading? ›

A common approach for new day traders is to start with a goal of $200 per day and work up to $800-$1000 over time. Small winners are better than home runs because it forces you to stay on your plan and use discipline. Sure, you'll hit a big winner every now and then, but consistency is the real key to day trading.

Can I make 1000 per day from trading? ›

Earning Rs. 1000 per day in the share market requires knowledge, discipline, and a well-defined strategy. Whether you choose day trading, swing trading, fundamental analysis, or any other approach, remember that success takes time and effort. The share market can be highly rewarding but carries inherent risks.

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 make money just trading stocks? ›

Trading is often viewed as a high barrier-to-entry profession, but as long as you have both ambition and patience, you can trade for a living (even with little to no money). Trading can become a full-time career opportunity, a part-time opportunity, or just a way to generate supplemental income.

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.

How do you get paid from stocks? ›

Collecting dividends—Many stocks pay dividends, a distribution of the company's profits per share. Typically issued each quarter, they're an extra reward for shareholders, usually paid in cash but sometimes in additional shares of stock.


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