A different way to invest

To understand the strategy outlined in this article, it’s helpful to start with the basics.

An option is a contract that gives someone the right—but not the obligation—to buy or sell a stock at a set price before a certain date.

• A call option gives the right to buy shares
• A put option gives the right to sell shares

In this case, you're not buying an option—you’re selling a put option to someone else. That means you’re offering to buy SAP shares at a specified price (e.g. EUR 250) if the buyer chooses to exercise their right at expiry.

In return, you receive a cash payment up front—called the premium. You set aside the necessary cash in advance in case you’re assigned. This is why it’s referred to as a cash-secured strategy.

Effectively, you are saying:
“I’m willing to buy SAP at a lower price than today’s—if that happens at expiry, fine. If it doesn’t, I still keep the income.”

Example trade: selling a EUR 250 Mini put

Here’s how a trade might look based on recent market prices.

• Product: SAP Mini (10) put
• Strike price: EUR 250
• Expiry: 18 July 2025
• Premium: EUR 3.76 per share
• Total income: EUR 37.60 (10 shares × EUR 3.76)
• Cash to set aside: EUR 2,500

Breakeven level if assigned at expiry: EUR 250 – EUR 3.76 = EUR 246.24

Estimated yield (if the option expires without assignment):
EUR 37.60 / EUR 2,500 ≈ 1.5 % over 24 days
This is a simple return and does not account for fees, tax, or compounding.

Why Mini options can lower the barrier

SAP’s Mini options cover 10 shares per contract, instead of the usual 100. This significantly reduces the required capital.

For this trade, you would need to set aside EUR 2,500 instead of EUR 25,000, making the approach more accessible for individual investors.

These contracts were recently launched on selected European stocks, including SAP, with the goal of enabling broader access to listed options strategies.

What can happen at expiry

Risks and considerations

• Assignment can only occur at expiry. If SAP closes below EUR 250 on 18 July 2025, you may be required to buy the shares at that price.
• Share price may fall further. If assigned, and the price continues to decline, you would hold shares with a potential unrealised loss.
• Earnings can add volatility. SAP is scheduled to report earnings after this option expires.
• This strategy is not risk-free. While you earn income, the downside is similar to owning the shares from EUR 250.

What happens if you're assigned?

If SAP closes below EUR 250 at expiry and you’re assigned, you will purchase 10 shares at EUR 250 each. After that, one possibility is to sell covered calls on the shares you now own, which may provide additional income.

However, this depends on your individual circumstances and is not a recommendation.

Summary checklist

• You have EUR 2,500 in available cash
• You would be comfortable owning SAP shares at EUR 250
• You understand that outcomes occur at expiry (18 July 2025)
• You’ve reviewed costs, tax considerations, and potential results

Key terms explained

• Option: A contract giving the right—but not the obligation—to buy or sell a stock at a set price
• Put option: Gives the right to sell shares
  
• Premium: The payment received when selling an option
  
• Assignment: When the buyer of the option chooses to exercise at expiry
  
• Strike price: The price at which shares may be bought (if assigned)
  
• Mini option: Covers 10 shares instead of 100

Important note: This article is for educational purposes only and does not constitute investment advice. Options involve risks and are not suitable for all investors. Please ensure you understand the risks and consult relevant documentation or a qualified professional before making investment decisions.