What Is a Married Put? A married put is the name given to an options trading strategy where an investor, holding a long position in a stock, purchases an at-the-money put option on the same stock to protect against depreciation in the stock's price. The benefit is that the investor can lose a small but limited amount of money on the stock in the worst scenario, yet still participates in any gains from price appreciation. The downside is that the put option costs a premium and it is usually significant. A married put may be contrasted with a covered call.
KEY TAKEAWAYS
KEY TAKEAWAYS
- This option strategy protects an investor from drastic drops in the price of the underlying stock.
- The cost of the option can make this strategy prohibitive.
- Put options vary in price depending on the volatility of the underlying stock.
- The strategy might work well for low-volatility stocks where investors are worried about a surprise announcement that would drastically change the price.
source: https://www.investopedia.com/terms/m/marriedput.asp
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