They're suggesting you enter 2 financial derivatives contracts. Specifically options on the level of the S&P 500 index as it will be in Dec 22.
The first transaction is to buy a, so-called, put option struck at $3625. This means that if the level of the S&P is below the strike price ($3625) on the 16th Dec, you will make the difference between the level then and the strike price. Buying this contract will cost you some money, called the premium.
They're also suggesting selling a similar contract struck at a lower price ($3600). It will have a similar payoff to the first one but for the buyer of the contract. For you, you'll lose the difference between the S&P level and the strike price if the S&P level is below $3600 in Dec. You will receive a premium from the buyer for this trade. The premium will be a little less than the cost of the option you bought because the strike price is further from the current market level.
The reason for the 2 together is that, for most future levels of the S&P, gains and losses will largely net out. You'll lose a bit of money (the differences between the premia) if the level doesn't go below $3625. But you'll gain a bit more if it does ($25 - the diff between the premia if I recall correctly).
The current level is about $4470, so the premia for both should be quite low as the strike price is a long way from the current level. We call that an out-of-the-money option. As such, the differences between the premia will also be very small.
In summary, they're suggesting a pretty cheap way to make money if the S&P tanks by Xmas. And you would lose (relatively) little if it didn't tank.
Do not consider this to be investment advice. I reserve the right to have completely forgotten options 101 which I did 20 odd years ago.
The first transaction is to buy a, so-called, put option struck at $3625. This means that if the level of the S&P is below the strike price ($3625) on the 16th Dec, you will make the difference between the level then and the strike price. Buying this contract will cost you some money, called the premium.
They're also suggesting selling a similar contract struck at a lower price ($3600). It will have a similar payoff to the first one but for the buyer of the contract. For you, you'll lose the difference between the S&P level and the strike price if the S&P level is below $3600 in Dec. You will receive a premium from the buyer for this trade. The premium will be a little less than the cost of the option you bought because the strike price is further from the current market level.
The reason for the 2 together is that, for most future levels of the S&P, gains and losses will largely net out. You'll lose a bit of money (the differences between the premia) if the level doesn't go below $3625. But you'll gain a bit more if it does ($25 - the diff between the premia if I recall correctly).
The current level is about $4470, so the premia for both should be quite low as the strike price is a long way from the current level. We call that an out-of-the-money option. As such, the differences between the premia will also be very small.
In summary, they're suggesting a pretty cheap way to make money if the S&P tanks by Xmas. And you would lose (relatively) little if it didn't tank.
Do not consider this to be investment advice. I reserve the right to have completely forgotten options 101 which I did 20 odd years ago.