RISK REVERSAL	PROTECTIVE PUT
About Strategy	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod 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..

RISK REVERSAL Vs PROTECTIVE PUT - Details

	RISK REVERSAL	PROTECTIVE PUT
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	PE (Put Option)
Number Of Positions	2	1
Strategy Level	Advance	Beginners
Reward Profile	Unlimited	Unlimited
Risk Profile	Unlimited	Limited
Breakeven Point	Premium received - Put Strike Price	Purchase Price of Underlying + Premium Paid

RISK REVERSAL Vs PROTECTIVE PUT - When & How to use ?

	RISK REVERSAL	PROTECTIVE PUT
Market View	Bullish	Bullish
When to use?	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.
Action	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.	Buy 1 ATM Put
Breakeven Point	Premium received - Put Strike Price	Purchase Price of Underlying + Premium Paid

RISK REVERSAL Vs PROTECTIVE PUT - Risk & Reward

	RISK REVERSAL	PROTECTIVE PUT
Maximum Profit Scenario	You have unlimited profit potential to the upside.	Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario	You have nearly unlimited downside risk as well because you are short the put	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid
Risk	Unlimited	Limited
Reward	Unlimited	Unlimited

RISK REVERSAL Vs PROTECTIVE PUT - Strategy Pros & Cons

	RISK REVERSAL	PROTECTIVE PUT
Similar Strategies	-	Long Call, Call Backspread
Disadvantage	Unlimited Risk.	• 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	Unlimited profit.	• 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.