PROTECTIVE PUT	SHORT 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..	Short Put Butterfly Option Strategy  In Short Put Butterfly strategy, a trader is neutral in nature and expects the market to remain range bound in the near future. A trader will buy 2 ATM Put Options; sell 1 ITM & 1 OTM Put Options. Here risk and returns both are limited. Risk:< .. Read more..

PROTECTIVE PUT Vs SHORT PUT BUTTERFLY - Details

	PROTECTIVE PUT	SHORT 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 Short Put - Net Premium Received, Lower Breakeven Point = Strike Price of Lowest Strike Short Put + Net Premium Received

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

	PROTECTIVE PUT	SHORT 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.	In Short Put Butterfly strategy, a trader is neutral in nature and expects the market to remain range bound in the near future.
Action	Buy 1 ATM Put	Sell 1 ITM Put, Buy 2 ATM Put, Sell 1 OTM Put
Breakeven Point	Purchase Price of Underlying + Premium Paid	Upper Breakeven Point = Strike Price of Highest Strike Short Put - Net Premium Received, Lower Breakeven Point = Strike Price of Lowest Strike Short Put + Net Premium Received

PROTECTIVE PUT Vs SHORT PUT BUTTERFLY - Risk & Reward

	PROTECTIVE PUT	SHORT PUT 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 Higher Strike Short Put - Strike Price of Long Put - Net Premium Received + Commissions Paid
Risk	Limited	Limited
Reward	Unlimited	Limited

PROTECTIVE PUT Vs SHORT PUT BUTTERFLY - Strategy Pros & Cons

	PROTECTIVE PUT	SHORT PUT BUTTERFLY
Similar Strategies	Long Call, Call Backspread	Short Condor, Reverse Iron Condor
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.	• High risk strategy and may cause huge losses if the price of the underlying stocks falls steeply. • Higher profit is only possible when shares get close to expiration.
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.	• Benefits from time decay. • Traders can earn more in a rising or range bound scenario. • Benefits from a surge in volatility.