Selling an option is underwriting. The seller accepts a risk somebody else wants to be rid of and is paid a premium for carrying it, which is the same business an insurance company has been in since 1688. These pages describe how that business is run properly: what to hold in reserve before writing anything, which contracts are worth writing at all, how to decide whether a premium is adequate, and what protection actually survives contact with a crisis.
Every figure on these pages is illustrative and is computed from a single stated snapshot, so the numbers on one page cannot contradict the numbers on another. Nothing here is advice, and no return figure is asserted anywhere.
Reserves Before Policies
Reserves, risk of ruin, the shock matrix, and what a broker does to a position in a crisis.
Pricing the Policy
Forecasting realised volatility, reading implied volatility as a rate card, and the threshold that decides whether a position is worth writing.
Writing and Reinsuring the Book
Structures ranked by risk, hedging in practice, and why a position that reports as protection frequently is not.