PROTECTIVE PUT	PROTECTIVE PUT
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..	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..

PROTECTIVE PUT Vs PROTECTIVE PUT - Details

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

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

	PROTECTIVE PUT	PROTECTIVE PUT
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 is adopted when a trader is long on the underlying asset but skeptical of the downside.
Action	Buy 1 ATM Put	Buy 1 ATM Put
Breakeven Point	Purchase Price of Underlying + Premium Paid	Purchase Price of Underlying + Premium Paid

PROTECTIVE PUT Vs PROTECTIVE PUT - Risk & Reward

	PROTECTIVE PUT	PROTECTIVE PUT
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid
Risk	Limited	Limited
Reward	Unlimited	Unlimited

PROTECTIVE PUT Vs PROTECTIVE PUT - Strategy Pros & Cons

	PROTECTIVE PUT	PROTECTIVE PUT
Similar Strategies	Long Call, Call Backspread	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.	• 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.
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 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.