Why are options so expensive compared to home insurance?

[wxytrader]

It costs about $1200 per year to protect a $500k home so why does it cost 62k to protect a 500k stock position?

500k in AAPL =5000 ATM Sep2024 put contracts @ .59 delta = 2950 put contracts @ $21= $61,950

???

 

[TheBigShort]

It costs about $1200 per year to protect a $500k home so why does it cost 62k to protect a 500k stock position?

500k in AAPL =5000 ATM Sep2024 put contracts @ .59 delta = 2950 put contracts @ $21= $61,950

???

Risk

 

[Overnight]

It costs about $1200 per year to protect a $500k home so why does it cost 62k to protect a 500k stock position?

500k in AAPL =5000 ATM Sep2024 put contracts @ .59 delta = 2950 put contracts @ $21= $61,950

???

5000 ATM put contracts @174 = $86.5 million in stock...??

 

[wxytrader]

5000 ATM put contracts @174 = $86.5 million in stock...??

? to protect a 500k AAPL position for 1 year (sep2024 put), you would need 5000 contracts*.59 delta=2950 contracts x 21 per contract = $61,950

 

[wxytrader]

It should be a flat rate like with home insurance. The risk is no different than home insurance risks.

 

[ZBZB]

Opportunity to be in the stock insurance business.

 

[wxytrader]

Opportunity to be in the stock insurance business.

You're not wrong. It could be very lucrative. I will sit on this idea until I see someone else become a billionarre from it.

https://www.investopedia.com/ask/answers/are-my-investments-insured/
Looks like you are insured for broker insolvency but I can't find any third party investment insurance.

 

[ZBZB]

You're not wrong. It could be very lucrative. I will sit on this idea until I see someone else become a billionarre from it.

https://www.investopedia.com/ask/answers/are-my-investments-insured/
Looks like you are insured for broker insolvency but I can't find any third party investment insurance.

search options wheel.

 

[destriero]

It costs about $1200 per year to protect a $500k home so why does it cost 62k to protect a 500k stock position?

500k in AAPL =5000 ATM Sep2024 put contracts @ .59 delta = 2950 put contracts @ $21= $61,950

???

Because speculation is not the same thing as property damage, right? The homeowner will not intentionally act contrary to self-interest, and if so, the insurance company won't pay on arson.

Have you even tried to buy private hurricane insurance in Florida on the coastal Panhandle?

 

[hilmy83]

It costs about $1200 per year to protect a $500k home so why does it cost 62k to protect a 500k stock position?

500k in AAPL =5000 ATM Sep2024 put contracts @ .59 delta = 2950 put contracts @ $21= $61,950

???

Where the hell do you live? $1200/year for 500k home?