5.4 Lessons learnt

  • Selling calls on your stocks can generate as a nice and welcome additional income.
  • Note that this is only wisely to do when you own the stocks, especially when you are new to options!
  • Selling put options means you are obliging yourself to buy stocks for a certain price at a certain moment in time. It is very important to never sell more option then you are looking to own shares!
  • Imagine you sell 10 puts on a stock with a strike price of 20,00. This means you are taking on an obligation of 10 x 20,00 x 100 = 20.000 EUR.
  • You do not need to have this entire amount on your account but if the price of a stock goes to 14,00 you are obliged to buy at 20,00.