9.5 Lessons learnt

What have we learnt?

  • Selling put options means you are obliging yourself to buy a stock for a certain price at a certain moment in time. It is very important to never sell more options than you are looking to own shares!  
  • If 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 
  • You don’t need to have this entire amount on your account but if the price of the stock goes to 14,00 you are obliged to buy at 20,00  
  • If you don’t want to comply with your obligation to buy shares based on a sold put 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
  • There are no specific rules for which action is best, you can roll your option or have the shares delivered