Split-strike strategy?!

Reading a Barron's article on Bernie Madoff's so-called trading strategy and since i know little to nothing about stock trading, i'm interested to find out how cheaters cheat, it is amazing.

Jargon seems to be the one thing that enables people to fuck around with other people's heads and steal from them at the same time.  Here's what the Barron's writer, Erin E. Arvedlund, wrote about Madoff and the strategy: 

"A Madoff hedge-fund offering memorandums describes his strategy this way: "Typically, a position will consist of the ownership of 30-35 S&P 100 stocks, most correlated to that index, the sale of out-of-the-money calls on the index and the purchase of out-of-the-money puts on the index. The sale of the calls is designed to increase the rate of return, while allowing upward movement of the stock portfolio to the strike price of the calls. The puts, funded in large part by the sale of the calls, limit the portfolio's downside."

Among options traders, that's known as the "split-strike conversion" strategy. In layman's terms, it means Madoff invests primarily in the largest stocks in the S&P 100 index -- names like General Electric ,
Intel and Coca-Cola . At the same time, he buys and sells options against those stocks. For example, Madoff might purchase shares of GE and sell a call option on a comparable number of shares -- that is, an option to buy the shares at a fixed price at a future date. At the same time, he would buy a put option on the stock, which gives him the right to sell shares at a fixed price at a future date.

The strategy, in effect, creates a boundary on a stock, limiting its upside while at the same time protecting against a sharp decline in the share price. When done correctly, this so-called market-neutral strategy produces positive returns no matter which way the market goes." 

HolyFS!  what does this mean?!  the only thing i've ever had is visions of the future and right now i see the dow at 5000, 25% unemployment, no doubt. don't ask me how and why i have any credibility to predict this, but considering how badly "professionals" have done "playing" the market, i don't think i will be far off. HolyFS!!  go to plan b.