I'm looking for a way to get cash-in-hand in exchange for future obligation.

For example, I can sell deep-in-the-money puts and buy out-of-the-money puts (for hedge) with expiration of 2 years, The problem here is that it can lead to a loss of more than double the received amount.

Is there a way for me to get paid with low risk of my obligation? (something like insurance policy)?

Thank you

  • $\begingroup$ The premium should equal the risk. If there was a known area where risk were (temporarily) undervalued, the the market would buy it and the price would be pushed up until it was fair. That is, why is anyone going to sell you something for less than it's expected value? $\endgroup$ – will Jan 27 '17 at 7:49
  • $\begingroup$ @will I'm willing to pay an appropriate interest for this, just not 200% as in the put example $\endgroup$ – kambi Jan 27 '17 at 7:54
  • $\begingroup$ The example you give "like an insurance policy" can end up having to pay out many times the premium. And in all massively otm trades, the potential payoff is many times the premium, since it is extremely unlikely. $\endgroup$ – will Jan 27 '17 at 7:57

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