Protective Put, Explained

What it is

You own at least 100 shares and buy a put against them. The put gives you the right to sell at the strike no matter how far the stock falls — so your downside below the strike is capped. Like insurance, you pay a premium for protection you hope you won't need. (Bought at the same time as the shares, it's called a "married put.")

The numbers

You own 100 shares at $50; the stock is now $52. You buy the $50 put for $1.50 ($150) to protect through a rocky stretch.

• Downside capped at the $50 strike — below it, the put gains roughly dollar-for-dollar as the stock falls.
• Cost: the $150 premium — the "deductible," which lowers your breakeven.
• Upside: unchanged — you still own the shares and keep gains above (minus the premium).

When to use it

When you want to stay long but sleep at night — protecting unrealised gains, or holding through an uncertain event like earnings without risking a full gap-down. It's the opposite mindset to selling premium: here you're paying for protection.

The catch

Insurance costs money, and buying it repeatedly eats into returns. Puts are also most expensive exactly when you want them most (high IV, falling markets). Many people fund the put by selling a call against the shares — which turns it into a collar.

How TickerRisk helps

The events calendar shows which of your holdings have earnings or catalysts coming — the moments a protective put is worth considering — and the options page shows the IV you'll be paying for it.