Start Your Own Insurance Business - In The Stock Market
Insurance companies are one of the most lucrative businesses around.
You receive residual income from customers ensuring year round asset coverage.
Many people consider starting their own company but the startup costs and requirements can be daunting.
For one, you have to decide which products you wish to insure, i.
e.
cars, home or if you have a certain niche.
Then you have to get a license, financial resources for start up costs which can run at least $20,000 or more.
The reason insurance is so successful is because the collected premiums outweigh the occasional and unlikely losses, as long as you run the business well.
It's mainly a play on emotion.
What if I told you there is much easier type of insurance business you can set up with all the same principals, but nowhere near the tedious startup costs and client headaches? Moreover, you don't need any kind of license and the products you insure have almost no risk of permanent loss.
In this article I shall explain this a unique opportunity from an insurance business perspective.
In the stock market, many investors buy what is called "portfolio insurance".
This usually involves buying to open a contract known as a "put option".
By doing so, an investor can profit on a sudden downturn of the underlying asset, e.
g.
a stock like Apple or IBM or even a commodity like gold.
When a sudden downturn in the market does occur, or someone merely wants to protect their profit position, more put buyers start emerging as the fear of loss begins to manifest itself.
In that manner, the exact same principals of insuring a car or house apply in the stock market.
Many investors buy these options hoping for the big payout that rarely comes.
Or they could be right but wind up paying too much for their contract and still lose money.
By being the seller of these put options, you are the underwriter, collecting premiums on contracts which you rarely have the obligation to fulfill.
As a writer of these contracts you are agreeing to buy the stock at a certain price within a certain period, usually at a lower price than the current market price.
You profit whether the stock goes up, does nothing or goes down a little.
You only "lose" if it falls off a cliff.
And here is the real beauty of this type of insurance.
When you do "lose" and have to fulfill your obligation, it is to buy and own a valuable asset- the underlying stock.
When an insurance company pays out, the money is gone forever.
But your obligation is to buy a tangible asset, which can increase in price thereby getting your upfront investment back.
Moreover, there are additional opportunities whereby you can get paid to wait while this happens.
The key here is to only "insure" those companies with the best balance sheets or are the stalwarts of their industry.
I'm talking about businesses that have been here for the last 50 years and will likely be here another 50.
Many of these are household names like Apple, IBM and McDonalds.
The reason these companies have been around so long because they have great management and the financial clout to get through difficult times.
Of course every company suffers set backs, but the best companies eventually adapt or fix their problems due to their enormous resources.
Many investors are fixated on the latest new sexy company like Tesla or Facebook.
But these unproven companies have the potential for a big bust from disappointing expectations.
For the purpose of this business, boring is better.
And safer.
You don't even need to advertise to find clients as a traditional company needs to.
You can initiate this transaction anytime and the market makers will open the contracts for you and immediately deposit your cash premium into your account.
You can do as much or as little as you wish, but of course you should not over allocate or "underwrite" more than your particular account can handle.
All you need is a good discount broker to open up an investment portfolio and you are in business.
Moreover you will be learning a valuable lesson that will be financially frugal your whole life- how to manage your own savings and retirement funds.
No one cares mare about your portfolio performance than you.
As a person who has been trading options for 17 years, I have figured out methods that work utilizing this type of strategy and treat it like a business.
It is an effective strategy anyone wanting a part or full time income can implement.
You receive residual income from customers ensuring year round asset coverage.
Many people consider starting their own company but the startup costs and requirements can be daunting.
For one, you have to decide which products you wish to insure, i.
e.
cars, home or if you have a certain niche.
Then you have to get a license, financial resources for start up costs which can run at least $20,000 or more.
The reason insurance is so successful is because the collected premiums outweigh the occasional and unlikely losses, as long as you run the business well.
It's mainly a play on emotion.
What if I told you there is much easier type of insurance business you can set up with all the same principals, but nowhere near the tedious startup costs and client headaches? Moreover, you don't need any kind of license and the products you insure have almost no risk of permanent loss.
In this article I shall explain this a unique opportunity from an insurance business perspective.
In the stock market, many investors buy what is called "portfolio insurance".
This usually involves buying to open a contract known as a "put option".
By doing so, an investor can profit on a sudden downturn of the underlying asset, e.
g.
a stock like Apple or IBM or even a commodity like gold.
When a sudden downturn in the market does occur, or someone merely wants to protect their profit position, more put buyers start emerging as the fear of loss begins to manifest itself.
In that manner, the exact same principals of insuring a car or house apply in the stock market.
Many investors buy these options hoping for the big payout that rarely comes.
Or they could be right but wind up paying too much for their contract and still lose money.
By being the seller of these put options, you are the underwriter, collecting premiums on contracts which you rarely have the obligation to fulfill.
As a writer of these contracts you are agreeing to buy the stock at a certain price within a certain period, usually at a lower price than the current market price.
You profit whether the stock goes up, does nothing or goes down a little.
You only "lose" if it falls off a cliff.
And here is the real beauty of this type of insurance.
When you do "lose" and have to fulfill your obligation, it is to buy and own a valuable asset- the underlying stock.
When an insurance company pays out, the money is gone forever.
But your obligation is to buy a tangible asset, which can increase in price thereby getting your upfront investment back.
Moreover, there are additional opportunities whereby you can get paid to wait while this happens.
The key here is to only "insure" those companies with the best balance sheets or are the stalwarts of their industry.
I'm talking about businesses that have been here for the last 50 years and will likely be here another 50.
Many of these are household names like Apple, IBM and McDonalds.
The reason these companies have been around so long because they have great management and the financial clout to get through difficult times.
Of course every company suffers set backs, but the best companies eventually adapt or fix their problems due to their enormous resources.
Many investors are fixated on the latest new sexy company like Tesla or Facebook.
But these unproven companies have the potential for a big bust from disappointing expectations.
For the purpose of this business, boring is better.
And safer.
You don't even need to advertise to find clients as a traditional company needs to.
You can initiate this transaction anytime and the market makers will open the contracts for you and immediately deposit your cash premium into your account.
You can do as much or as little as you wish, but of course you should not over allocate or "underwrite" more than your particular account can handle.
All you need is a good discount broker to open up an investment portfolio and you are in business.
Moreover you will be learning a valuable lesson that will be financially frugal your whole life- how to manage your own savings and retirement funds.
No one cares mare about your portfolio performance than you.
As a person who has been trading options for 17 years, I have figured out methods that work utilizing this type of strategy and treat it like a business.
It is an effective strategy anyone wanting a part or full time income can implement.
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