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Protective Put
FundamentalsAn options strategy where a trader buys a put option on shares they already own, creating a price floor that limits downside risk while preserving unlimited upside potential.
Related Terms
Options
Contracts that give the right (but not the obligation) to buy (call) or sell (put) a security at a specified price before a certain date.
Strike Price
The predetermined price at which an options contract can be exercised to buy (call) or sell (put) the underlying security.
Covered Call
An options strategy where a trader sells a call option against shares they already own, collecting premium income in exchange for capping upside potential at the strike price.
Risk Management
The overall framework for limiting losses and protecting trading capital.