Derivatives Strategies
Protective Put
Definition
What is Protective Put?
A strategy that owns an asset and buys a put to limit downside.
Example in practice
How This Looks in Practice
The put establishes a minimum sale price for the shareholding.
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Related Terms
Derivatives Strategies
Covered Call
A strategy that owns the underlying asset and sells call options against it.
Derivatives StrategiesCollar
A strategy combining a protective put with a written call, often to reduce hedging cost.
Derivatives StrategiesLong Straddle
Buying a call and a put with the same strike and expiration to benefit from a large move in either direction.
Option GreeksDelta
The estimated change in an option's price for a small change in the underlying price.