PROTECTIVE PUT	STRIP
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..	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 Vs STRIP - Details

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

PROTECTIVE PUT Vs STRIP - When & How to use ?

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

PROTECTIVE PUT Vs STRIP - Risk & Reward

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

PROTECTIVE PUT Vs STRIP - Strategy Pros & Cons

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