#protective_option
Protective option
A protective option or married option is a financial transaction in which the holder of securities buys a type of financial options contract known as a "call" or a "put" against stock that they own or are shorting. 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 protective put or married put, while one constructed with a call to cover shorted stock is a protective call or married call. 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.
Thu 27th
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