Fixed Income

Bond Options

You can sell bond options to generate income.

There are 2 types of options:

  1. A "Put" option gives the buyer the right but not the obligation to sell the underlying bond at a predetermined price.
  2. A "Call" option gives the buyer the right but not the obligation to buy the underlying bond at a predetermined price.

In both scenarios, the seller of the option is paid a premium by the buyer of the option. Options are not suitable for all investors, as they carry significant risks. Only recommended for experienced investors.

Some of the Benefits

Potential to enhance returns:

  • By selling "put" options while waiting to buy a bond at a lower price
  • By selling "call" options while waiting to sell a bond at a higher price

Some of the Risks

  • Selling an option generally entails considerably greater risk than purchasing options and a seller of options may sustain a loss well in excess of the amount of the premium received.

For more information:

  • Contact your Wealth Manager or visit any of our branches.

How would you rate this page?

Thank you! We appreciate your feedback.

Any further suggestions?

500

What issues did you face today?

Any further suggestions?

500
I agree to Terms & Conditions