Protective Puts Explained | Option Strategy Basics

[@RyanOConnellCFA]

🎓 Tutor With Me: 1-On-1 Video Call Sessions Available ► Join me for personalized finance tutoring tailored to your goals: ryanoconnellfinance.com/finance-tutoring/ 💾 Download Free Excel File: ► Download the file created in this video free here: ryanoconnellfinance.com/product/protective-puts-excel-model/

[@Bipun_Maharjan]

ThanksBoss that daigram made the concept more clear. Protective put sure is smart move limiting losses 😮

[@RyanOConnellCFA]

It is my pleasure! Glad you got value out of it

[@Steveocork]

thanks for the good video , presumably when you say all you can ever lose is 2$ is 2 x100 =$200 for 1 put contract?

[@RyanOConnellCFA]

That is correct! Thank you for clarifying

[@sharif_left_the_chat]

Your videos are so good!

[@RyanOConnellCFA]

Thank you! Much appreciated

[@michaelingram8056]

Great video, but am not sure about one thing: how is setting up a Protective Put any better than using a Stop Loss ? In both cases, if the Share Price drops, you lose a bit of money, and you lose the stock. Are they not the same?

[@RyanOConnellCFA]

A protective put guarantees the right to sell your stock at a predetermined price regardless of market conditions, offering protection even during rapid price drops or gaps, while a stop loss may fail to execute at the desired price in such scenarios. Additionally, with a protective put, you retain ownership of the stock and can benefit if the price rebounds, unlike a stop loss, which sells the stock outright.

[@dynamicsea2276]

Great video and explanation

[@RyanOConnellCFA]

I appreciate that!

[@danielwei9537]

so helpful

[@RyanOConnellCFA]

Glad it was helpful!

[@suraj2206]

Nicely explained

[@RyanOConnellCFA]

Thank you!

[@funtamania]

Isn't the strike price normally set below the spot price for protective put?

[@Barykalla]

Good job

[@RyanOConnellCFA]

Thank you!

[@juicemanjordan]

very helpful

[@RyanOConnellCFA]

Glad you think so!

[@AttentionPaidMe]

How exactly do we pick the perfect put as insurance to our call, when attempting to exercise this strategy

[@floorgang1483]

Thankssss

[@RyanOConnellCFA]

My pleasure!

[@Bat12483]

If I purchase a protective put and the stock never goes down, would the loss of the put be considered a wash sale?

[@learnwithabiya7915]

❤

[@wxchief6737]

not bad, schwab didn’t want to approve me for long puts, guess this will do :/

[@RyanOConnellCFA]

Oh man, that stinks. That is silly because there is no credit involved for a long put, you just pay the premium with your own cash. Are protective puts a lower tier for permissions on Schaub?

[@wxchief6737]

@@RyanOConnellCFA Correct, It is the base level. Includes covered calls + secured puts, and protective options. I can respect them for trying to protect the new trader… Question since we are here. Would i need the underlying stock to purchase a protective put or can i speculate with it by itself? Thanks, have a good week. :)

[@RyanOConnellCFA]

@@wxchief6737 Yea, it is also probably a major legal issue for them if they let new traders come on and rack up massive losses and debt! What do you mean by speculate with "it by itself"? What is "it", the protective put? If so, a protective put is a combo of two positions: long stock + long put. So a protective put requires owning the underlying stock

[@wxchief6737]

@@RyanOConnellCFA Thanks for the response. I will try to apply again for long options. Those choices aren’t what i’m looking unfortunately. Bring on the pain! Would love to swing via options

[@joeg816]

K for strike. Baseball fan? :) ⚾

[@RyanOConnellCFA]

I go to a couple Texas Rangers games every year but besides that I hardly pay any attention! How about you? And the K for strike price is pretty universally used