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At a Glance
Potential to Enhance Returns
Earn additional income by selling put options while waiting to buy the underlying share at a lower price
Earn additional income by selling call options while waiting to sell a share at a higher price
Receive Premium Up-front
You will receive your potential profit up-front in the form of the option fee or premium when you sell the option
What are Equity Options?
Broadly speaking, there are 2 types of Equity Options:
- A "Call" option gives the buyer the right, but not the obligation, to buy the underlying shares at a predetermined price.
- A "Put" option gives the buyer the right but not the obligation to sell the underlying share at a predetermined price.
In both cases, the buyerr of the option pays the option seller a fee (called premium). Options are not suitable for all investors, as they carry significant risks. They are recommended only for investors with appropriate risk appetite.
Selling options generally entail considerably higher risks, when compared with purchasing options. The option seller may sustain a loss well in excess of the option premium amount received if the share price moves in a direction other than what was aticipate.