Married Put
Buying stock and protective put simultaneously
What is Married Put?
Married Put Buying a put option at the same time you purchase the underlying stock, establishing a floor on the maximum loss. The put acts as insurance, guaranteeing you can sell shares at the strike price regardless of how far the stock falls. The cost of protection is the premium paid for the put.
Complete Definition
Buying a put option at the same time you purchase the underlying stock, establishing a floor on the maximum loss. The put acts as insurance, guaranteeing you can sell shares at the strike price regardless of how far the stock falls. The cost of protection is the premium paid for the put.
Example
Buy 100 AAPL at $150 and simultaneously buy a $145 put for $3. Maximum loss is $8/share ($5 to strike + $3 premium).
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