PROTECTIVE PUT	LONG 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..	Long Call Butterfly Option Strategy A trader, who is neutral in nature and believes that there will be very low volatility i.e. expects the market to remain range bound, will implement this strategy. This strategy involves selling of 2 ATM Call Options, buying 1 ITM Call Option & buying 1 OTM Call Option of the same expiry date & same underlying asset. The difference between the strikes sho .. Read more..

PROTECTIVE PUT Vs LONG CALL BUTTERFLY - Details

	PROTECTIVE PUT	LONG 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	Upper Breakeven = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium

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

	PROTECTIVE PUT	LONG 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 should be used when you're expecting no volatility in the price of the underlying.
Action	Buy 1 ATM Put	Sell 2 ATM Call, Buy 1 ITM Call, Buy 1 OTM Call
Breakeven Point	Purchase Price of Underlying + Premium Paid	Upper Breakeven = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium

PROTECTIVE PUT Vs LONG CALL BUTTERFLY - Risk & Reward

	PROTECTIVE PUT	LONG CALL BUTTERFLY
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	Adjacent strikes - Net premium debit.
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	Net Premium Paid
Risk	Limited	Limited
Reward	Unlimited	Limited

PROTECTIVE PUT Vs LONG CALL BUTTERFLY - Strategy Pros & Cons

	PROTECTIVE PUT	LONG CALL BUTTERFLY
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.	• Due to limited lifespan of call options, you can lose the premium paid. • Limited profit which is bound in a narrow range between the two wing strikes.
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.	• Under this strategy, a trader can book profit even when there is not volatility in the market. • Limited risks to the net premium paid. • This strategy allows you to gain more profits by investing less and limiting your losses to minimum.