The One-Man Insurance Company.
How I generate location-independent income.
*Disclaimer: The purpose of this publication (Options Mavericks) is to document my journey with options trading for income and traveling. I am not qualified to give any financial advice and nothing I say or do is to be interpreted as investment advice. Do your own research and seek the appropriate financial advice from a registered financial service provider. I make no guarantees as to the accuracy of the information put forth*
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Here I share my insights operating a ‘one-man insurance business’ in various locations around the globe
Operating as a one-man insurance business, an option trader assumes a role similar to that of an insurance company, taking on risk and generating income through the sale of options. Let's explore how an option trader can operate in this manner.
Assessing Risk:
Similar to an insurance company, an option trader evaluates and assesses risks before entering into options contracts. They consider factors such as market conditions, volatility, and the specific risks associated with each option strategy. By understanding the risks involved, the trader can make informed decisions and set appropriate premiums for the options they sell.
Setting Premiums ( The Money Maker)
Just as an insurance company sets premiums based on the potential risk exposure, an option trader determines the premiums for the options they sell. The premium represents the income the trader receives upfront from the buyer of the option. It should reflect the perceived risk and potential obligations associated with the option contract. The trader's experience, market analysis, and pricing models help establish fair premiums that provide a suitable risk-reward balance.
Risk Management: (Don’t Go Bust!)
An option trader, as a one-man insurance business, must manage their risk exposure effectively. They can do this by diversifying their options portfolio across various underlying assets, strike prices, and expiration dates. By spreading their risk, the trader can minimize potential losses from any single option contract. Additionally, the trader can employ risk management techniques such as stop-loss orders or adjusting their positions to mitigate potential risks.
Fulfilling Obligations: (Know Your Contractual Obligations)
When selling options, the trader takes on specific obligations. For example, selling a put option obligates the trader to buy the underlying asset at the predetermined strike price if the option is exercised. Similarly, selling a call option obligates the trader to sell the underlying asset at the strike price if the option is exercised. The trader must be prepared to fulfill these obligations if they arise. Managing available funds and maintaining sufficient liquidity is crucial to fulfill these obligations promptly.
Probability Analysis:
To operate as a one-man insurance business effectively, the option trader relies on probability analysis and statistical models. By analyzing historical data, market trends, and implied volatility, the trader can assess the probability of options being exercised. This analysis helps them make informed decisions on which options to sell, strike prices to choose, and appropriate premium rates to set. Probability analysis assists in managing risk exposure and maximizing the trader's income potential.
Ongoing Monitoring and Adjustments:
Similar to an insurance company continuously monitoring their risk exposure and adjusting premiums as needed, an option trader must actively manage their options portfolio. They should monitor market conditions, stay informed about relevant news and events, and reassess their positions as necessary. This ongoing monitoring allows the trader to adapt to changing market dynamics and make adjustments to their strategies to optimize risk management and income generation.
Operating as a one-man insurance business in the options market requires careful risk assessment, premium setting, risk management, and ongoing monitoring. It's essential for the option trader to have a solid understanding of options trading, employ proper risk management techniques, and continually educate themselves to stay updated on market trends. As with any investment activity, the trader should consider their risk tolerance, financial goals, and consult with a qualified financial advisor before engaging in options trading.
If you’re interested in seeing precisely how I operate this business on a weekly basis keep reading!
Portfolio Performance YTD
Trading Stack: $53,637 (this compounds/decreases with profits/losses starting from $50,000 in May 2023)
Yearly Profits $23, 697
Ave Monthly Margin Req $65,322
ROI YTD 35.88%
Disclaimer: this is not a performance guarantee, I cannot advise nor guarantee anything. This is simply me sharing my journey as a type of public trade-journal
If this is your first time reading ‘Options Mavericks’
I am an options trader, that is, I generate income by essentially running a one-man insurance business.
I sell insurance options over publicly traded stocks.
Now, I make absolutely NO promises nor guarantees, other than to share at least one weekly trade I’m making to generate income for myself.
This is NOT a ‘get-rich-quick’ scheme and I am certainly NOT a ‘Guru’ trying to charge you a ton of money in exchange for ‘advice’, ‘teaching’ or any other kind of empty promises. Nothing is to be considered advice, just my opinion.
This publication is simply me sharing what I am doing.
I share with you:
The exact details of a trade I’m making (Options/stock details, entry and exit price, premium received, amount bought/sold, profits/losses and capital required…EVERYTHING)
Live performance tracking spreadsheet which you can access 24/7
Spreadsheet with the list of assets I trade, their live prices and my estimate of what they are really worth $$$
My current location in the world and how I leverage different currencies to increase my standard of living
To get alerts on every weekly trade I share + complete set of records of all trades made + much more bonus material why not join the squad with your 7 day free trial below?
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All the best,
Benjamin