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Robinhood stock lending
Posted on 7/21/22 at 3:44 pm
Posted on 7/21/22 at 3:44 pm
I’m eligible for stock lending on Robinhood. This is my play money account but it’s over $100k now. Any thoughts on risk for this? From the research I’ve done you are basically loaning to short sellers who give you a fee and use your voting rights. Some risk they could not repay you in a massive short squeeze but this seems unlikely as I don’t own meme stocks. My main concern was if your shares aren’t returned prior to a dividend it seems like you could be taxed at a regular tax rate.
Any body on the board doing this and what are your experiences?
Any body on the board doing this and what are your experiences?
3
Posted on 7/21/22 at 5:48 pm to Drizzt
What about when they force you to sell so the hedge funds can cover?
Posted on 7/21/22 at 7:31 pm to Drizzt
For what, like 1 percent/year? Better ways to make money.
Posted on 7/21/22 at 8:10 pm to j1897
Think it's 1.5% right now.
You can still sell the stock whenever and sell calls and whatnot against the stock. Doesn't seem to be a huge downside, just more passive income.
You can still sell the stock whenever and sell calls and whatnot against the stock. Doesn't seem to be a huge downside, just more passive income.
Posted on 7/21/22 at 8:16 pm to thunderbird1100
1 month Treasuries are earning 2.15% with no risk. 3% if you go 6 months.
Posted on 7/21/22 at 8:17 pm to j1897
quote:
For what, like 1 percent/year? Better ways to make money.
It’s a nice boost for buy and holders. It doesn’t tie you down at all, you can sell the asset whenever.
Posted on 7/21/22 at 8:23 pm to gpburdell
quote:
1 month Treasuries are earning 2.15% with no risk. 3% if you go 6 months.
Again, this is for stock you're already holding. I'm not saying go out and buy whatever stock and loan it out.
It's just passive income on stock you own, you can still sell the stock whenever and write calls, etc
This isn't about how should I put cash where, its just a way to make money on stock you own. It's simply an extra 1.5% or whatever they are giving.
This post was edited on 7/21/22 at 8:25 pm
Posted on 7/21/22 at 10:10 pm to thunderbird1100
Yes, it's a no brainer to loan out stocks you plan to hold and there's no difference in your ability to trade them, you can still sell them like normal. I've made around $70k lending stocks since early 2020 but lately it's dried up because there's not as much shorting going on with the market being down.
I don't know about dividend tax implications but the main risk is that you can lose your shares if your brokerage goes bankrupt however unlikely that may be.
I don't know about dividend tax implications but the main risk is that you can lose your shares if your brokerage goes bankrupt however unlikely that may be.
This post was edited on 7/21/22 at 10:12 pm
Posted on 7/21/22 at 10:14 pm to thunderbird1100
Since you seem knowledgeable, what about the dividend tax issue. Robinhood says something like “we’ll try to return stock to you before the dividend date” which didn’t seem like a strong commitment to me. I’m sure they are phrasing it the way their lawyer tells them but is this a problem for people in actual practice?
Thanks diseasefreeforall for the comment.
Thanks diseasefreeforall for the comment.
This post was edited on 7/21/22 at 10:16 pm
Posted on 7/21/22 at 10:33 pm to Drizzt
I've never had dividend stocks loaned out but it looks like if your dividend stock is loaned on the ex-dividend date you get what are called cash in lieu payments that's probably taxed as ordinary income. I'd say ask a tax pro to be sure but it may be tough to find one with expertise, my CPA knows nothing about fully paid lending programs.
Interactive Brokers guide to FPL
Interactive Brokers guide to FPL
Posted on 7/22/22 at 5:36 pm to Drizzt
quote:
This is my play money account but it’s over $100k now
Y'all make me feel like I don't belong on this board.
Posted on 7/22/22 at 8:12 pm to iwantacooler
Everyone starts somewhere buddy. I’m 45 and didn’t start making real money until I was almost 40. Lots of good advice on here if you can tolerate the dickheads. Keep putting your money to work instead of spending it and you’ll do well.
This post was edited on 7/22/22 at 8:14 pm
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