  The option is a financial derivative, which is regularly employed in reducing
the risk of its underlying securities. However, investing in option is still
risky. Such risk becomes much severer for speculators who utilize option as a
means of leverage to increase their potential returns. In order to mitigate
risk on their positions, the rudimentary concept of financial option insurance
is introduced into practice. Two starkly-dissimilar concepts of insurance and
financial option are integrated into the formation of financial option
insurance. The proposed financial product insures investors option premiums
when misfortune befalls on them. As a trade-off, they are likely to sacrifice a
limited portion of their potential profits. The loopholes of prevailing
financial market are addressed and the void is filled by introducing a stable
three-entity framework. Moreover, a specifically designed mathematical model is
proposed. It consists of two portions: the business strategy of matching and a
verification-and-modification process. The proposed model enables the option
investors with calls and puts of different moneyness to be protected by the
issued option insurance. Meanwhile, it minimizes the exposure of option
insurers position to any potential losses.
