Protective Put

Description

Holding the stock while buying a Put option.

Trading Logic

Insurance for stock holdings. Limits downside while keeping upside.

Practical Example

Own 100 shares of AAPL ($150), buy one $140 Put ($4).

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P/L Curve

Chart Description
  • X-Axis: Stock price at expiration
  • Y-Axis: Expected P/L ($)
  • Green area: Profit; Red area: Loss