The OP obviously is thinking of Credit Spreads. He doesn't know the correct terms so he is trying to express himself phonetically. Anyone experienced in option trading should be able to point him in the right direction.
"Buy options only to sell the insurance" IMO ..... I take that as buying options as insurance over a short position. A Credit Spread.
Still not risk free. The OP clearly watched a video of someone trying to sell him their road to riches option course.
I didn't say a Credit Spread was risk free. I'm trying to decipher this odd statement "Buy options only to sell the insurance"
How do we apply this business to the capital markets? Let's look for a moment at the price insurance. Suppose you own shares and you're worried that the price could drop. Not many years ago, even on the Romanian market, we saw important stock prices down to 95% of the price, right? Do you remember? Or even recently in international markets, we have seen oil-related stocks falling strongly in value over a relatively short period of time. What can you do to avoid a disaster in your own account? Many years ago, it has become possible to secure yourself against such significant price cuts by paying a premium and buying a price insurance. The owner of a car buys accident insurance by paying a premium. In return, he receives an insurance policy (a contract between the insurance company and the owner of the car) that protects him from an important financial loss in the event of an accident. Both the insurance company and the owner of the car hope that the accident will not occur. The same happens when a stockholder buys price insurance. He pays the first and in return receives an option, which is a contract between the insurer and the shareholder. The option is called "Put" and gives the right to sell the shares it holds at a guaranteed price at any given time, both (both price and date) agreed with the insurer. If the stock price drops below the agreed price, the owner may sell it to the insurer. The insurer is the person who sold the price insurance to the shareholder and received the first. Both hope the assured event does not happen. The reality is that 80% of cases do not really happen. And if the insurer knows how to carry out the insurance process under certain conditions, minimizing even the risk, in more than 90% of cases the insured event does not take place. In the capital market first cashed for the price insurance is Instant Guaranteed Income. It is an income because the money is cashed; the income is "instant" because it is instantly collected at the time of the option sale; is "guaranteed" by the buyer-seller option contract and the seller keeps that money. The Instant Guaranteed Income program also offers the guarantee of free-lance trading under certain conditions. ABOUT THE STRATEGY - IMPORTANT TO KNOW An essential aspect of insurance sale is that you get the money up front at the beginning of the insurance period. Thus, the insurer immediately acquires the right to use the money of others. If the risk is assumed correctly in the insurance process, then the insurer (the person who sold the Put) not only retains the first but can also use this money for the entire contractual period. This money represents Instant Guaranteed Income of the nature of the options contract and may be invested in short-term interest-bearing instruments or may be used to sell additional insurance. In both situations, revenue from premiums grows under the compounding effect and with them and the balance of the seller's account. Eight years ago I began to buy stock price insurance. I did not do it for the first time, I had traded futures spread until then for many years and we achieved excellent returns. But the sale of share price insurance has proven to produce even higher returns. In addition, we have brought improvements to the method, which effectively eliminated 99.9% of the risk. I started to show others how to apply the strategy. There are certain subtleties harder to detect at first glance. I have promoted the Program under the name "Instant Guaranteed Income" IS something like this possible it`s for some that has worked with JOE ROSS
It's an option strategy that involves writing put options. Yes it can generate income but it's not guaranteed income and it's definitely risk-free. In fact it could be actually highly risky and you are actually giving up potentially higher profit potential in exchange for just some profit upfront, profit that not only can be taken away but turned into losses, massive losses sometimes once the underlying instrument becomes really volatile. There is a way to kinda limit NOT eliminate your losses with hedging but that's going to eat away your profit.
Can you tell me where i can read this in a book for much cheapper? And what are the incomes generated.Low risk yet 30-40% per year as he suggests?