I keep hearing about married puts in trading chats, but I really don’t get it.
I noticed someone said they are used for protection, but how does that actually function? Should beginners learn about this or is it too complex?
I want to expand my knowledge on strategies beyond basic calls and puts.
A married put is like insurance for your car - you own the stock and buy a put option together.
The put lets you sell at a fixed price even if the stock tanks. Your max loss is just the gap between what you paid and the strike price.
It’s pretty straightforward once you get it. Perfect if you’re bullish long-term but worried about short-term drops.
Married puts serve as a safety net for your stock investments. If the stock price falls below the strike price, the value of the put option increases, balancing out your losses. You do need to pay a premium for this kind of protection. This strategy is beneficial if you believe in the stock long-term but are worried about short-term fluctuations. Just keep in mind that the premium will cut into your overall profits, so use this strategy wisely.
Buying stock and a put at the same strike provides downside protection. Premium costs reduce returns. Effective for volatile stocks during earnings or significant news.
Married puts saved my ass last year when Apple tanked 15% in two days.
You buy the stock and a put option at the same time. The put’s basically insurance - stock crashes, put goes up, losses get covered.
Learned this the hard way after Tesla burned me without any protection. Now I always use married puts on anything volatile.
Married puts help cover losses. I lost 800 on AMD without one.