STRIP	PROTECTIVE PUT
About Strategy	Strip Option Strategy Strip Strategy is the opposite of Strap Strategy. When a trader is bearish on the market and bullish on volatility then he will implement this strategy by buying two ATM Put Options & one ATM Call Option, of the same strike price, expiry date & underlying asset. If the prices move downwards then this strategy will make more profits compared to short straddle because of the Read more..	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..

STRIP Vs PROTECTIVE PUT - Details

	STRIP	PROTECTIVE PUT
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	PE (Put Option)
Number Of Positions	3	1
Strategy Level	Beginners	Beginners
Reward Profile	Unlimited	Unlimited
Risk Profile	Limited	Limited
Breakeven Point	Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2)	Purchase Price of Underlying + Premium Paid

STRIP Vs PROTECTIVE PUT - When & How to use ?

	STRIP	PROTECTIVE PUT
Market View	Neutral	Bullish
When to use?	When a trader is bearish on the market and bullish on volatility then he will implement this strategy.	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.
Action	Buy 1 ATM Call, Buy 2 ATM Puts	Buy 1 ATM Put
Breakeven Point	Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2)	Purchase Price of Underlying + Premium Paid

STRIP Vs PROTECTIVE PUT - Risk & Reward

	STRIP	PROTECTIVE PUT
Maximum Profit Scenario	Price of Underlying - Strike Price of Calls - Net Premium Paid OR 2 x (Strike Price of Puts - Price of Underlying) - Net Premium Paid	Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario	Net Premium Paid + Commissions Paid	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid
Risk	Limited	Limited
Reward	Unlimited	Unlimited

STRIP Vs PROTECTIVE PUT - Strategy Pros & Cons

	STRIP	PROTECTIVE PUT
Similar Strategies	Strap, Short Put Ladder	Long Call, Call Backspread
Disadvantage	Expensive., The share price must change significantly to generate profit., High Bid/Offer spread can have a negative influence on the position.	• 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.
Advantages	Profit is generated when the share price changes in any direction., Limited loss., The profit is potentially unlimited when share prices are moving.	• 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.