PROTECTIVE PUT	SHORT 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..	Short Put Option Strategy A trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level. Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put. Read more..

PROTECTIVE PUT Vs SHORT PUT - Details

	PROTECTIVE PUT	SHORT 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	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Purchase Price of Underlying + Premium Paid	Strike Price - Premium

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

	PROTECTIVE PUT	SHORT 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 works well when you're Bullish that the price of the underlying will not fall beyond a certain level.
Action	Buy 1 ATM Put	Sell Put Option
Breakeven Point	Purchase Price of Underlying + Premium Paid	Strike Price - Premium

PROTECTIVE PUT Vs SHORT PUT - Risk & Reward

	PROTECTIVE PUT	SHORT PUT
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	Premium received in your account when you sell the Put Option.
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	Unlimited (When the price of the underlying falls.)
Risk	Limited	Unlimited
Reward	Unlimited	Limited

PROTECTIVE PUT Vs SHORT PUT - Strategy Pros & Cons

	PROTECTIVE PUT	SHORT PUT
Similar Strategies	Long Call, Call Backspread	Bull Put Spread, Short Starddle
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. • Huge losses if the price of the underlying stock falls steeply.
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.	• Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account.