32.5 Lessons learnt
What have we learnt?
- Options generate leverage! With just a small investment it’s possible to generate a ‘high’ yield
- This obviously implicates risks. Going back to the previous video, it’s clear that with € 550 you can buy indirect shares for a value of € 2500. Be careful, if you have for example € 3000 on your account don’t get tempted to take too much risk by buying too many calls
- We all know that there is a chance that you don’t buy one option but five. By doing this you are multiplying your risk by 5!
- Selling calls on your stocks can generate a nice and welcome additional income. It is wise to only do this when you own the stocks, especially when you are new to options!
- If you don’t want to comply with your obligation to sell your shares based on a sold call option you should roll your option when it comes ‘in the money’
- Rolling your option means that simultaneously you buy your sold option back and replace this option by selling a new one