Insurance ⎊ Definition

Insurance

In the context of options, insurance refers to using put options to safeguard a portfolio against significant price drops. The premium paid for the put is effectively the insurance cost.

If the asset crashes, the put gain offsets the asset loss. It is a prudent strategy for risk-averse investors.

Multiplier

Index Price

Portfolio Insurance

Insurance Fund

Cost Reduction

Risk Variance

Limited Profit

Long Term Investing

Glossary

Insurance Linked Securities

Instrument ⎊ Insurance-Linked Securities (ILS) are financial instruments whose value and/or payout are triggered by an insured event, such as a natural catastrophe or mortality rates.