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protective put

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protective put
A put option owned in conjunction with the corresponding stock. A protective put guarantees the holder will receive at minimum proceeds that equal the exercise price of the put. For example, an investor could hold 100 shares of Coca-Cola while also holding a put on Coca-Cola stock. The protective put shelters the investor in case the stock's price declines in the market. Also called married put.


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The investor is getting rid of protective puts that they owned because they do not expect the stock to drop by as much as the premium they are collecting, which is why we see it as limited bullish behavior, rather than a sign of a raging bull.
The demand for protective puts has also been turned higher - though volatility here is masking the general trend towards safe guarding positions.
Protective Put The protective put limits the risk that gains from previously purchased shares that have gained in value will decrease.
 
 
 
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