PROTECTIVE PUT	IRON 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..	Iron Butterfly Option Strategy  This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements. A trader will buy 1 OTM Put Option, sell 1 ATM Put Option, sell 1 ATM Call Option, buy 1 OTM Call Option. Due to offsetting of long and short positions, this strategy bags limited profit with limited risk. Read more..

PROTECTIVE PUT Vs IRON BUTTERFLY - Details

	PROTECTIVE PUT	IRON BUTTERFLY
Market View	Bullish	Neutral
Type (CE/PE)	PE (Put Option)	CE (Call 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 Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

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

	PROTECTIVE PUT	IRON 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 implemented when a trader is bearish on the volatility of market and neutral on the market movements.
Action	Buy 1 ATM Put	Buy 1 OTM Put, Sell 1 ATM Put, Sell 1 ATM Call, Buy 1 OTM Call
Breakeven Point	Purchase Price of Underlying + Premium Paid	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

PROTECTIVE PUT Vs IRON BUTTERFLY - Risk & Reward

	PROTECTIVE PUT	IRON BUTTERFLY
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	Net Premium Received - Commissions Paid
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk	Limited	Limited
Reward	Unlimited	Limited

PROTECTIVE PUT Vs IRON BUTTERFLY - Strategy Pros & Cons

	PROTECTIVE PUT	IRON BUTTERFLY
Similar Strategies	Long Call, Call Backspread	Long Put Butterfly, Neutral Calendar Spread
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.	• Large commissions involved. • Probability of losses are higher.
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.	• Less amount of capital investment, steady income with low risk. • Traders can predict maximum loss and profit. • Versatile strategy, investors can transform position into bear call spread or bull put spread easily.