PROTECTIVE PUT	SHORT CALL
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 Call Option Strategy A trader shorts or writes a Call Option when he feels that underlying stock price is likely to go down. Selling Call Option is a strategy preferred for experienced traders. However this strategy is very risky in nature. If the stock rallies on the upside, your risk becomes potentially unquantifiable and unlimited. If the strategy .. Read more..

PROTECTIVE PUT Vs SHORT CALL - Details

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

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

	PROTECTIVE PUT	SHORT CALL
Market View	Bullish	Bearish
When to use?	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.	It is an aggressive strategy and involves huge risks. It should be used only in case where trader is certain about the bearish market view on the underlying.
Action	Buy 1 ATM Put	Sell or Write Call Option
Breakeven Point	Purchase Price of Underlying + Premium Paid	Strike Price of Short Call + Premium Received

PROTECTIVE PUT Vs SHORT CALL - Risk & Reward

	PROTECTIVE PUT	SHORT CALL
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	Max Profit = Premium Received
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	Loss Occurs When Price of Underlying > Strike Price of Short Call + Premium Received
Risk	Limited	Unlimited
Reward	Unlimited	Limited

PROTECTIVE PUT Vs SHORT CALL - Strategy Pros & Cons

	PROTECTIVE PUT	SHORT CALL
Similar Strategies	Long Call, Call Backspread	Covered Put, Covered Calls
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 to the upside underlying stocks. • Potential loss more than the premium collected.
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.	• With the help of this strategy, traders can book profit from falling prices in the underlying asset. • Less investment, more profit. • Traders can book profit when underlying stock price fall, move sideways or rise by a small amount.