Buying a protective put option

Buying a Protective Put

In the last post, we discussed Married put option strategy. These strategies are also known as Hedging (protecting) strategy or profit protection strategy. These strategies help to protect yourself from losing money. Today we are discussing Buying a Protective Put strategy. The Married put and  Protective Put are essentially same but the difference is that in Protective Put the investors buys put option for the shares he already owns. Let understand this strategy by taking an example, Suppose we purchased 100 shares of XYZ company at Rs 50 per shares,  the cost of shares is Rs 5000 (50*100)....
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