PROTECTIVE PUT	LONG PUT BUTTERFLY
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 Butterfly Option Strategy  The Long Put Butterfly is a neutral strategy where a trader will be bearish on the volatility i.e. he thinks the market will have sideways kind of movement and will not rally sharply in either direction in the near future. This strategy involves sale of 2 ATM Put Options, buy 1 ITM and 1 OTM Put Option. The risk and reward are limited. Read more..

PROTECTIVE PUT Vs LONG PUT BUTTERFLY - Details

	PROTECTIVE PUT	LONG PUT BUTTERFLY
Market View	Bullish	Neutral
Type (CE/PE)	PE (Put Option)	PE (Put Option)
Number Of Positions	1	4
Strategy Level	Beginners	Advance
Reward Profile	Unlimited	Limited
Risk Profile	Limited	Limited
Breakeven Point	Purchase Price of Underlying + Premium Paid	Upper Breakeven Point = Strike Price of Highest Strike Long Put - Net Premium Paid, Lower Breakeven Point = Strike Price of Lowest Strike Long Put + Net Premium Paid

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

	PROTECTIVE PUT	LONG PUT BUTTERFLY
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.	The Long Put Butterfly is a neutral strategy where a trader will be bearish on the volatility i.e. he thinks the market will have sideways kind of movement and will not rally sharply in either direction in the near future.
Action	Buy 1 ATM Put	Buy 1 OTM Put, Sell 2 ATM Puts, Buy 1 ITM Put
Breakeven Point	Purchase Price of Underlying + Premium Paid	Upper Breakeven Point = Strike Price of Highest Strike Long Put - Net Premium Paid, Lower Breakeven Point = Strike Price of Lowest Strike Long Put + Net Premium Paid

PROTECTIVE PUT Vs LONG PUT BUTTERFLY - Risk & Reward

	PROTECTIVE PUT	LONG PUT BUTTERFLY
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	Strike Price of Higher Strike Long Put - Strike Price of Short Put - Net Premium Paid - Commissions Paid
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	When Price of Underlying <= Strike Price of Lower Strike Long Put OR Price of Underlying >= Strike Price of Higher Strike Long Put
Risk	Limited	Limited
Reward	Unlimited	Limited

PROTECTIVE PUT Vs LONG PUT BUTTERFLY - Strategy Pros & Cons

	PROTECTIVE PUT	LONG PUT BUTTERFLY
Similar Strategies	Long Call, Call Backspread	Iron Condors, Iron Butterfly
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.	• Risk is higher than reward. • When the underlying price is in between the two breakeven points, time decay hurts 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.	• Limited maximum loss. • Unlimited profit potential, risk only limited to loss of premium. • Benefits from low volatility.