Married Put Strategy

Married Put Strategy

A put and stock are considered to be married if they are bought on the same day, and the position is designated at that time as a hedge.

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Married Put

A strategy to reduce or eliminate the risk of price depreciation on a stock by buying a put option on that stock. When an investor owns a stock and is concerned about price depreciation, he/she may buy a put option, giving him/her the right but not the obligation to sell the stock at a relatively high strike price on or before the expiration date. If the price does depreciate, the investor exercises the option and sells the stock to cover losses and perhaps make a profit. If the price appreciates instead, the investor simply lets the option expire and may keep the stock or sell it at the higher price. A married put may be thought of as insurance against price depreciation.