Protected Strategy

A position that has limited risk. A protected short sale (short stock, long call) has limited risk, as does a protected straddle write (short straddle, long out-of-the-money combination). See also Combination and Straddle.

protected strategy

An investment strategy with a goal of limiting risk. For example, purchasing a stock and a put on the stock establishes a limit on the amount of money that may be lost since the put protects against losses derived from a declining value of the stock. Although protected strategies limit losses, they also generally penalize potential profits.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

References in periodicals archive

In the end, this principal protected strategy is great for getting people's feet wet in potentially better inflation-busting returns (as good returns from the stock market can encourage them to allocate more to stocks).

Guaranteed stock market investments?

"We might also, depending on a minimum account size, add what we call a principal protected strategy, where your capital is preserved.

Planning a more secure future

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