Ask HN: What was your best passive income in 2016?
i own a decent amount of tesla stock and 2016 was a great year for lending it out.<p>since tesla is such a controversial company, lots of people want to own the stock (expecting it to go up) and lots of people want to short sell it (expecting it go down).<p>if you&#x27;re a stock holder, certain places (like interactive brokers) will let you lend your stock holdings to people that want to sell it short. you earn a premium on this loan, but its basically risk-free since the brokerage bears the counter-party risk.<p>because short interest is so high, there was a substantial portion of 2016 where there weren&#x27;t enough shares available to satisfy short sellers&#x27; demand. TSLA became classified as &quot;hard to borrow&quot; and borrowing premiums would be anywhere from 8% to 100+% depending on the day&#x2F;demand. this is money short sellers pay on top of the cost to purchase the shares (and one more thing to bear on top of the risk of short-selling, but that&#x27;s another story).<p>the premium is paid daily, and the brokerage usually takes a chunk of it (often half), so if you had $100k of tesla stock and the premium was 50%, you&#x27;d earn (100,000 * 50% * (1&#x2F;2) &#x2F; 365) = $68.50 for each day that someone borrowed your shares. the rate fluctuated daily, but this still netted me several thousand dollars of truly passive income, since i was planning to hold the stock either way. this is also a huge income stream for institutional shareholders that are sitting on millions of shares.