Protective Put (Married Put)
Description
Buying a put alongside a long position in the underlying to insure against a decline while keeping unlimited upside.
Setup
- Hold (or buy) one unit of the underlying.
- Buy one put option, typically out of the money, as insurance against a decline.
Context
Used by a long-term holder who wants to stay invested through uncertainty without accepting open-ended downside risk.
Risk Profile
Loss is capped at the entry price minus the strike, plus the premium paid for the put. Gain is unlimited as the underlying rises.
Pros
- Removes the open-ended downside of a bare long position.
- Keeps full upside participation.
- Known worst case from the moment the trade is placed.
Cons
- Put premium is a recurring cost if renewed over time.
- Underperforms a bare long position in a quiet or rising market.
- Cost of insurance rises when it is most wanted, i.e. when volatility is already elevated.
Effect of Time
Time decay works against the long put, quietly eroding the cost of the insurance each day.
Effect of Volatility
Rising implied volatility increases the cost of the protective put but also increases its value as a hedge.
Look-Alike Strategies
Live Structure
| Position | Right | Ratio | Strike | Expiry | Premium | Fill Price | Est. Fee |
|---|---|---|---|---|---|---|---|
| Long | Underlying | 1 | — | — | $84530.9000 | $84530.9000 | $0.0000 |
| Long | Put | 1 | $84000.0000 | 24 Sep 2026 | $76.0778 | $92.9840 | $9.5097 |
Estimated Cost to Assemble
An estimate of what entering this structure right now would really cost: filling every leg by crossing the spread (the ask when buying, the bid when selling) instead of at the mid-price, plus an estimated exchange fee. Real fees and fills can differ from this estimate.
Payoff & Greeks vs. Underlying Price
The Greeks curves are a Black-Scholes model using each leg's current implied volatility, holding time to expiry fixed -- not live exchange data at every price, which only exists at the current price (dashed line).
Payoff at Expiration
This structure's value and profit/loss at expiration, at a handful of specific prices: every leg's strike, every breakeven, the current spot, and the chart's own range.
| Underlying Price | Value at Expiration | Profit / Loss | Return on Cost |
|---|---|---|---|
| $67100.0000 | $84000.0000 | -$606.9778 | -0.7% |
| $84000.0000 | $84000.0000 | -$606.9778 | -0.7% |
| $84530.9000 current breakeven | $84530.9000 | -$76.0778 | -0.1% |
| $100900.0000 | $100900.0000 | $16293.0222 | +19.3% |