At the same time... What is this called? It's shown low risk and good numbers in my graphs..
Buying a Stock and Selling a Put
- Thread starter rgilbert93
- Start date
Protective put.
It's called a married or protective put. For the position to be profitable the stock needs to rise beyond the price you paid for the long put. Conversely, if the stock falls, the put gains in value and (depending on the strike and greeks) wil offset the loss on the stock.
That's the drive-by explaination, anyway.
That's the drive-by explaination, anyway.
God I feel like an idiot. It's been a long day. I knew that.
You need a solid run up in a short amount of time and no decrease of volatility for this to be profitable. Otherwise the option premium is going to eat a lot of your profit.
JMBA. I expect exactly this to happen. Should the put be ITM? I'm thinking my graph doesn't factor in assignment, into my profits.
So I've made my own options strategy. TIme to test it out!
A married or protective put is when you buy a stock and buy a put to limit your loss in the event price falls.
When you buy a stock and sell a put, you are making a double bullish bet. If the stock price falls you lose money on the stock purchase and you lose money on the put you sold.
Selling a put only provides protection if you short a stock. That way if the stock price rises (going against your short position), the put you sold loses value, providing some mitigation of your unrealized loss.
When you buy a stock and sell a put, you are making a double bullish bet. If the stock price falls you lose money on the stock purchase and you lose money on the put you sold.
Selling a put only provides protection if you short a stock. That way if the stock price rises (going against your short position), the put you sold loses value, providing some mitigation of your unrealized loss.
So just to make sure, if I'm selling a put at a strike price of 5, that means if I get assigned someone else gets to buy it at that price?