PROTECTIVE PUT	LONG PUT
About Strategy	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. Read more..	Long Put Option Strategy This strategy is implemented by buying 1 Put Option i.e. a single position, when the person is bearish on the market and expects the market to move downwards in the near future. Risk: The maximum loss will be the premium amount paid.< .. Read more..

PROTECTIVE PUT Vs LONG PUT - Details

	PROTECTIVE PUT	LONG PUT
Market View	Bullish	Bearish
Type (CE/PE)	PE (Put Option)	PE (Put Option)
Number Of Positions	1	1
Strategy Level	Beginners	Beginners
Reward Profile	Unlimited	Unlimited
Risk Profile	Limited	Limited
Breakeven Point	Purchase Price of Underlying + Premium Paid	Strike Price of Long Put - Premium Paid

PROTECTIVE PUT Vs LONG PUT - When & How to use ?

	PROTECTIVE PUT	LONG PUT
Market View	Bullish	Bearish
When to use?	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.	A long put option strategy works well when you're expecting the underlying asset to sharply decline or be volatile in near future.
Action	Buy 1 ATM Put	Buy Put Option
Breakeven Point	Purchase Price of Underlying + Premium Paid	Strike Price of Long Put - Premium Paid

PROTECTIVE PUT Vs LONG PUT - Risk & Reward

	PROTECTIVE PUT	LONG PUT
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	Profit = Strike Price of Long Put - Premium Paid
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	Max Loss = Premium Paid + Commissions Paid
Risk	Limited	Limited
Reward	Unlimited	Unlimited

PROTECTIVE PUT Vs LONG PUT - Strategy Pros & Cons

	PROTECTIVE PUT	LONG PUT
Similar Strategies	Long Call, Call Backspread	Protective Call, Short Put
Disadvantage	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.	• 100% loss if strike price, expiration dates or underlying stocks are badly chosen. • Time decay.
Advantages	• Unlimited potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.	• Limited risk to the premium paid. • Less capital investment and more profit. • Unlimited profit potential with limited risk.