PROTECTIVE PUT	SHORT CALL 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..	Short Call Butterfly Option Strategy This strategy is opposite of the Long Call Butterfly Strategy, a trader expects the market to remain range bound in Long Call Butterfly, but here he expects the market to move beyond strike boundaries in Short Call Butterfly. If the trader is bullish on the market’s volatility, he will implement this strategy. Here also there should be equal distance between the .. Read more..

PROTECTIVE PUT Vs SHORT CALL BUTTERFLY - Details

	PROTECTIVE PUT	SHORT CALL BUTTERFLY
Market View	Bullish	Neutral
Type (CE/PE)	PE (Put Option)	CE (Call 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	Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium

PROTECTIVE PUT Vs SHORT CALL BUTTERFLY - When & How to use ?

	PROTECTIVE PUT	SHORT CALL 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.	This strategy is meant for special scenarios where you foresee a lot of volatility in the market due to election results, budget, policy change, annual result announcements etc.
Action	Buy 1 ATM Put	Buy 2 ATM Call, Sell 1 ITM Call, Sell 1 OTM Call
Breakeven Point	Purchase Price of Underlying + Premium Paid	Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium

PROTECTIVE PUT Vs SHORT CALL BUTTERFLY - Risk & Reward

	PROTECTIVE PUT	SHORT CALL BUTTERFLY
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	The profit is limited to the net premium received.
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	Higher strike price- Lower Strike Price - Net Premium
Risk	Limited	Limited
Reward	Unlimited	Limited

PROTECTIVE PUT Vs SHORT CALL BUTTERFLY - Strategy Pros & Cons

	PROTECTIVE PUT	SHORT CALL BUTTERFLY
Similar Strategies	Long Call, Call Backspread	Long Straddle, Long Call 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.	• Limited rewards, usually offer smaller return. • Profitability depends on the significant movement of stocks and options prices.
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.	• Even if the market is highly volatile, the risk exposure remains limited. • Without any extra investment, you can receive your premium. • Able to book profits even when the price movement cannot be predicted.