PROTECTIVE PUT	RISK REVERSAL
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..	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod .. Read more..

PROTECTIVE PUT Vs RISK REVERSAL - Details

	PROTECTIVE PUT	RISK REVERSAL
Market View	Bullish	Bullish
Type (CE/PE)	PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	1	2
Strategy Level	Beginners	Advance
Reward Profile	Unlimited	Unlimited
Risk Profile	Limited	Unlimited
Breakeven Point	Purchase Price of Underlying + Premium Paid	Premium received - Put Strike Price

PROTECTIVE PUT Vs RISK REVERSAL - When & How to use ?

	PROTECTIVE PUT	RISK REVERSAL
Market View	Bullish	Bullish
When to use?	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.
Action	Buy 1 ATM Put	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.
Breakeven Point	Purchase Price of Underlying + Premium Paid	Premium received - Put Strike Price

PROTECTIVE PUT Vs RISK REVERSAL - Risk & Reward

	PROTECTIVE PUT	RISK REVERSAL
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	You have unlimited profit potential to the upside.
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	You have nearly unlimited downside risk as well because you are short the put
Risk	Limited	Unlimited
Reward	Unlimited	Unlimited

PROTECTIVE PUT Vs RISK REVERSAL - Strategy Pros & Cons

	PROTECTIVE PUT	RISK REVERSAL
Similar Strategies	Long Call, Call Backspread	-
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 Risk.
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.	Unlimited profit.