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.
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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.