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Investing in options

Options

An option is a derivative, which means a financial product derived from another. The value of an option depends on the price development of the underlying asset to which it is linked. The underlying asset can be, for example, a share, bond, or index.

Investing involves risks. You could lose (some of) the money you invested.

The term ‘option’ suggests a temporary right to buy something, such as a house. If you take an option on a house, the seller is obliged to sell it to you. The same applies to investing. Options are standard contracts that grant you the right or impose the obligation to buy or sell something at a predetermined price.

Options allow you to respond to rising, constant and falling share prices. Therefore, it can be a useful investment product within your investment strategy. With options you can get a lot of return on a small investment, but the risk of a significant loss is also high.

The advantages and disadvantages of options

The advantages of options

  • Options offer you opportunities to respond to the rising, the falling and the remaining constant of the underlying asset. This way you can also achieve returns in a falling or constant market.
  • Due to the leverage effect, an option allows you to benefit more from a share price movement than from an investment in shares alone. 

The disadvantages of options

  • Options are complex investment products. You must understand them well before you can trade them responsibly.
  • You can lose more than your investment due to the leverage effect. And sometimes even have a debt.

What you need to know about options

This is how you trade options

If you invest independently with ABN AMRO, you can only invest in options through Self-directed Investing Plus. You can buy and sell options using the ABN AMRO app, Internet Banking, or My Dealingroom.

Learn how to place an order with the ABN AMRO app and Internet Banking

Discover the possibilities of My Dealingroom

Before you can invest in options with ABN AMRO, we ask that you first complete a knowledge test. You can take this test via Internet Banking, and you will receive an invitation for it when you apply for Self-directed Investing Plus with us. If you pass this test, you have sufficient knowledge to invest in options. If you do not pass, investing in options may not be suitable for you. In that case, you will not be able to place orders in options.

Investing involves risks

Investing involves risks. You could lose (some of) the money you invested. If you are going to invest, it is important that you are aware of this. Invest with money you can spare. Read more about the risks associated with investments.