PROTECTIVE PUT	RATIO PUT SPREAD
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..	Ratio Put Spread Option Strategy  This strategy involves buying ITM Puts and simultaneously selling OTM Puts, double the number of ITM Puts. This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited. Read more..

PROTECTIVE PUT Vs RATIO PUT SPREAD - Details

	PROTECTIVE PUT	RATIO PUT SPREAD
Market View	Bullish	Neutral
Type (CE/PE)	PE (Put Option)	PE (Put Option)
Number Of Positions	1	3
Strategy Level	Beginners	Beginners
Reward Profile	Unlimited	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Purchase Price of Underlying + Premium Paid	Upper Breakeven Point = Strike Price of Long Put +/- Net Premium Received or Paid, Lower Breakeven Point = Strike Price of Short Puts - (Points of Maximum Profit / Number of Uncovered Puts)

PROTECTIVE PUT Vs RATIO PUT SPREAD - When & How to use ?

	PROTECTIVE PUT	RATIO PUT SPREAD
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 used by a trader who is neutral on the market and bearish on the volatility in the near future.
Action	Buy 1 ATM Put	Buy 1 ITM Put, Sell 2 OTM Puts
Breakeven Point	Purchase Price of Underlying + Premium Paid	Upper Breakeven Point = Strike Price of Long Put +/- Net Premium Received or Paid, Lower Breakeven Point = Strike Price of Short Puts - (Points of Maximum Profit / Number of Uncovered Puts)

PROTECTIVE PUT Vs RATIO PUT SPREAD - Risk & Reward

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

PROTECTIVE PUT Vs RATIO PUT SPREAD - Strategy Pros & Cons

	PROTECTIVE PUT	RATIO PUT SPREAD
Similar Strategies	Long Call, Call Backspread	Short Straddle (Sell Straddle), Short Strangle (Sell Strangle)
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.	• Unlimited potential risk. • Limited profit.
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.	• Directional strategy so that there is either no upside or downside risk. • Able to profit even if trader is neutral on the market. • Higher probability of profit.