You can sell equity options to generate income.
There are 2 types of options:
- A "Put" option gives the buyer the right but not the obligation to sell the underlying stock at a predetermined price.
- A "Call" option gives the buyer the right but not the obligation to buy the underlying stock at a predetermined price.
In both cases 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 stock at a lower price
- By selling call options while waiting to sell a stock 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.