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