Protective put
Hold stock and buy a put as insurance. Caps downside at the put strike; gives up some upside to pay the premium.
INPUTS
Underlying price
$
Centers the payoff chart and computes P&L at this price.
Stock position
Shares
Entry
$
LEGS
Long put
Type
Side
Strike
$
Qty
Premium
$
RESULT
$60.001 strike$140.00
P&L at current spot (expiry)
−$150
Net debit−$10,150
Max profitUnlimited
Max loss−$650
Breakeven$101.50
Stock cost basis+$10,000
Premium paid+$150
RISK PROFILE
Max profit
Unlimited (stock can rise) minus premium
Max loss
(Stock entry − put strike) × shares + premium
Breakeven
Stock entry + (premium ÷ shares)
RELATED STRATEGIES
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