17:
25:
1117:
60:. The buyer of a protective option pays compensation, or "premium", for this transaction, which can limit losses on their stock position. One protective option is purchased for every hundred shares the buyer wishes to cover. A protective option constructed with a put to cover shares of stock that an investor owns is called a
83:
to limit losses on a stock position, especially in a fast-moving market. Although buyers of a protective option have to pay the up-front cost of the premium, the advantage is that they cannot lose more money than the option's
76:. In equilibrium, a protective put will have the same net payoff as merely buying a call option, and a protective call will have the same net payoff as merely buying a put option.
660:
235:
167:
1000:
690:
822:
88:, while a stop order could fill at a price worse than the stop price. Secondly, a stop loss could trigger during a stock's temporary
558:
1060:
228:
1142:
995:
640:
92:
or pullback just before it reverses back to the original direction again, while an option could last through all of that
1035:
573:
427:
221:
654:
1147:
832:
936:
747:
1055:
1050:
705:
650:
1005:
675:
665:
533:
374:
306:
192:
954:
802:
787:
752:
695:
146:
1015:
866:
782:
359:
89:
680:
969:
926:
916:
906:
627:
568:
503:
457:
452:
326:
286:
253:
93:
685:
974:
762:
508:
1025:
1010:
979:
964:
931:
797:
588:
553:
316:
281:
244:
41:
1030:
1020:
959:
946:
921:
807:
389:
911:
901:
891:
850:
845:
827:
757:
523:
518:
490:
442:
321:
261:
80:
45:
1121:
1091:
1086:
1040:
876:
871:
817:
727:
635:
608:
548:
543:
513:
462:
447:
364:
344:
57:
1096:
1081:
881:
792:
742:
719:
700:
528:
470:
437:
432:
412:
336:
105:
1136:
1076:
1045:
886:
812:
772:
767:
603:
475:
422:
417:
399:
296:
276:
896:
670:
598:
578:
538:
407:
379:
369:
311:
85:
777:
645:
616:
612:
563:
354:
349:
49:
16:
1101:
737:
732:
498:
384:
53:
24:
125:
291:
1116:
861:
583:
480:
301:
28:
Payoffs from a long put position, equivalent to that of a protective call
20:
Payoffs from a long call position, equivalent to that of a protective put
213:
23:
15:
68:, while one constructed with a call to cover shorted stock is a
217:
1069:
988:
945:
841:
718:
626:
489:
398:
335:
269:
260:
40:is a financial transaction in which the holder of
79:A protective option could be used instead of a
229:
168:"Protective Call (Short Stock and Long Call)"
8:
147:"Equity Option Strategies – Protective Puts"
266:
236:
222:
214:
193:"Options: An Alternative To Stop Orders"
1061:Power reverse dual-currency note (PRDC)
1001:Constant proportion portfolio insurance
117:
56:" against stock that they own or are
7:
996:Collateralized debt obligation (CDO)
14:
1115:
823:Year-on-year inflation-indexed
1:
833:Zero-coupon inflation-indexed
1036:Foreign exchange derivative
428:Callable bull/bear contract
96:until its expiration date.
1164:
1110:
937:Stock market index future
251:
44:buys a type of financial
1056:Mortgage-backed security
1051:Interest rate derivative
1026:Equity-linked note (ELN)
1011:Credit-linked note (CLN)
1006:Contract for difference
307:Risk-free interest rate
788:Forward Rate Agreement
29:
21:
1143:Derivatives (finance)
1016:Credit default option
360:Employee stock option
27:
19:
970:Inflation derivative
955:Commodity derivative
927:Single-stock futures
917:Normal backwardation
907:Interest rate future
748:Conditional variance
254:Derivative (finance)
1122:Business portal
975:Property derivative
980:Weather derivative
965:Freight derivative
947:Exotic derivatives
867:Commodities future
554:Intermarket spread
317:Synthetic position
245:Derivatives market
30:
22:
1148:Options (finance)
1130:
1129:
1031:Equity derivative
1021:Credit derivative
989:Other derivatives
960:Energy derivative
922:Perpetual futures
803:Overnight indexed
753:Constant maturity
714:
713:
661:Finite difference
594:Protective option
34:protective option
1155:
1120:
1119:
892:Forwards pricing
666:Garman–Kohlhagen
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46:options contract
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1133:
1132:
1131:
1126:
1114:
1106:
1092:Great Recession
1087:Government debt
1065:
1041:Fund derivative
984:
941:
902:Futures pricing
877:Dividend future
872:Currency future
855:
837:
710:
686:Put–call parity
622:
609:Vertical spread
544:Diagonal spread
514:Calendar spread
485:
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331:
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81:stop-loss order
70:protective call
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1097:Municipal debt
1094:
1089:
1084:
1082:Corporate debt
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1063:
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919:
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899:
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882:Forward market
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842:
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815:
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795:
790:
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770:
765:
763:Credit default
760:
755:
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745:
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735:
730:
724:
722:
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712:
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623:
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586:
581:
576:
571:
566:
561:
559:Iron butterfly
556:
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546:
541:
536:
531:
529:Covered option
526:
521:
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467:Mountain range
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396:
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333:
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279:
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264:
258:
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243:
241:
240:
233:
226:
218:
210:
209:
184:
159:
138:
126:"Married Puts"
116:
115:
113:
110:
109:
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106:Covered option
101:
98:
62:protective put
38:married option
13:
10:
9:
6:
4:
3:
2:
1160:
1149:
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1113:
1112:
1109:
1103:
1100:
1098:
1095:
1093:
1090:
1088:
1085:
1083:
1080:
1078:
1077:Consumer debt
1075:
1074:
1072:
1070:Market issues
1068:
1062:
1059:
1057:
1054:
1052:
1049:
1047:
1046:Fund of funds
1044:
1042:
1039:
1037:
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1029:
1027:
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1022:
1019:
1017:
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948:
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918:
915:
913:
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905:
903:
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890:
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887:Forward price
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883:
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826:
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821:
819:
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814:
811:
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806:
804:
801:
799:
798:Interest rate
796:
794:
791:
789:
786:
784:
781:
779:
776:
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771:
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723:
721:
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704:
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691:MC Simulation
689:
687:
684:
682:
679:
677:
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672:
669:
667:
664:
662:
659:
656:
652:
651:Black–Scholes
649:
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642:
639:
637:
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633:
631:
629:
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610:
607:
605:
604:Risk reversal
602:
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582:
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572:
570:
567:
565:
562:
560:
557:
555:
552:
550:
547:
545:
542:
540:
537:
535:
534:Credit spread
532:
530:
527:
525:
522:
520:
517:
515:
512:
510:
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502:
500:
497:
496:
494:
492:
488:
482:
479:
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461:
459:
458:Interest rate
456:
454:
453:Forward start
451:
449:
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431:
429:
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419:
416:
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391:
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380:Option styles
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297:Open interest
295:
293:
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288:
285:
283:
280:
278:
277:Delta neutral
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71:
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63:
59:
55:
51:
47:
43:
39:
35:
26:
18:
897:Forward rate
808:Total return
696:Real options
599:Ratio spread
593:
579:Naked option
539:Debit spread
370:Fixed income
312:Strike price
200:. Retrieved
197:Investopedia
196:
187:
175:. Retrieved
171:
162:
152:November 11,
150:. Retrieved
141:
131:November 11,
129:. Retrieved
120:
86:strike price
78:
74:married call
73:
69:
65:
61:
48:known as a "
37:
33:
31:
828:Zero Coupon
758:Correlation
706:Vanna–Volga
564:Iron condor
350:Bond option
90:retracement
66:married put
1137:Categories
1102:Tax policy
818:Volatility
728:Amortising
569:Jelly roll
504:Box spread
499:Backspread
491:Strategies
327:Volatility
322:the Greeks
287:Expiration
172:Tastyworks
112:References
94:volatility
42:securities
793:Inflation
743:Commodity
701:Trinomial
636:Bachelier
628:Valuation
509:Butterfly
443:Commodore
292:Moneyness
932:Slippage
862:Contango
846:Forwards
813:Variance
773:Dividend
768:Currency
681:Margrabe
676:Lattices
655:equation
641:Binomial
589:Strangle
584:Straddle
481:Swaption
463:Lookback
448:Compound
390:Warrants
365:European
345:American
337:Vanillas
302:Pin risk
282:Exercise
202:July 30,
177:July 30,
100:See also
58:shorting
52:" or a "
851:Futures
471:Rainbow
438:Cliquet
433:Chooser
413:Barrier
400:Exotics
262:Options
912:Margin
778:Equity
671:Heston
574:Ladder
524:Condor
519:Collar
476:Spread
423:Binary
418:Basket
783:Forex
738:Basis
733:Asset
720:Swaps
646:Black
549:Fence
408:Asian
270:Terms
617:Bull
613:Bear
355:Call
204:2022
179:2022
154:2016
133:2016
50:call
385:Put
72:or
64:or
54:put
36:or
1139::
615:,
375:FX
195:.
170:.
32:A
657:)
653:(
619:)
611:(
237:e
230:t
223:v
206:.
181:.
156:.
135:.
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.
