A protective put is a risk-management strategy using options contracts that investors employ to guard against the loss of owning a stock or asset.
DefinitionFormulaExample Home Finance Hedging Protective Put Protective PutProtective put (also known as married put) is an option strategy in which an investor purchases a put option to guard against any loss on the underlying asset which he already owns. Protective put is like insurance against ...
This maximum risk is realized if the stock price is at or below the strike price of the put at expiration. If such a stock price decline occurs, then the put can be exercised or sold. See the Strategy Discussion below. Stock price plus put price In this example: 100.00 + 3.25 = ...
At its core, the protective put strategy is insurance, plain and simple. And just as with car or home insurance, there’s a premium attached. That premium is the cost of peace of mind in a worst-case scenario. It’s up to you to decide when and where it’s needed. And remember: ...
In addition to protecting gains, traders often use options strategies to avoidtaxable events, which would result in capital gains taxes. For example, buying a put option in a protective collar strategy allows a trader to safeguard their gains and hedge against a market downturn; however, they on...
A protective put is a risk mitigation strategy that entails buying a put option to complement an existing position in a stock. The put is purchased...Become a member and unlock all Study Answers Start today. Try it now Create an acco...
Protective Call is a simple options trading strategy where you simply buy to open 1 contract of at the money call options for every 100 shares that you shorted. Protective Call Example : To seal in that $10 appreciate in value, you would buy to open 1 contract (equivalent to 100 shares...
screen, blind - a protective covering that keeps things out or hinders sight; "they had just moved in and had not put up blinds yet" armguard, bracer - a protective covering for the wrist or arm that is used in archery and fencing and other sports cap - something serving as a cover ...
For example, most e-reader users encounter minimal accessibility problems (thus face almost no additional costs) because their use of the product is compatible with the producer’s profit-maximising strategy. Thus, it is more efficient for the latter to charge relatively lower prices and extract ...
Encampment sweeps are not a new strategy for targeting visible homelessness in Canada. For example, Walby and Lippert (2012) document the ongoing encampment sweeps in the tourist area of downtown Ottawa. These sweeps are done to encourage tourism and protect the image of the nation's capital...