Protective Put
Computes the outcome of a protective put: holding a stock and buying a put as insurance against a fall. The put sets a floor on the loss but costs the premium, which raises the breakeven. It's the most direct insurance for a long position: the upside stays unlimited, the downside is capped. The tool returns the maximum loss and the breakeven. Enter the stock price, the put strike and the premium paid.
Result
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Protective Put
Computes the outcome of a protective put: holding a stock and buying a put as insurance against a fall. The put sets a floor on the loss but costs the premium, which raises the breakeven. It's the most direct insurance for a long position: the upside stays unlimited, the downside is capped. The tool returns the maximum loss and the breakeven. Enter the stock price, the put strike and the premium paid.
Insurance for a long position
Buying a put on a stock you own is the financial equivalent of insuring your car. You pay a premium and, in exchange, get the right to sell at the strike no matter how deep the price sinks. The protective put sets a floor on the loss while leaving the upside entirely free, with no ceiling.
Like all insurance, it costs. The premium paid raises your breakeven: the stock has to rise a little just to cover the cost of the protection. The maximum loss is limited to the distance between the stock price and the put strike, plus the premium. It's the strategy for those who want to sleep soundly holding a volatile position.
Enter the stock price, the put strike and the premium paid. The tool returns the maximum loss and the breakeven, remembering the upside stays unlimited. Puts closer to the price protect more but cost more; finding that balance is the strategy's central decision.
Related Tools
Collar (Protective Collar)
Computes the outcome of a collar: holding a stock, buying a put as a protective floor and selling a call as a ceiling, using the call premium to fund the put. It's the cheap way to protect a gain without closing the position — in exchange, you give up the upside above the ceiling. The tool returns the net option cost, the maximum profit, the maximum loss and the breakeven. Enter the stock price, the put and call strikes and the two premiums.
Bull Put Spread
Computes the outcome of a bull put spread: selling a higher-strike put and buying a lower-strike put, collecting a credit. It's a bullish (or neutral) bet that pockets the premium with risk capped by the bought put. The tool returns the credit received (maximum profit), the maximum loss and the breakeven. Enter the two strikes and the respective put premiums.
Bear Put Spread
Computes the outcome of a bear put spread: buying a higher-strike put and selling a lower-strike put, paying a debit. It's a bearish bet with limited risk and cost — cheaper than buying the put alone, in exchange for a capped profit. The tool returns the cost (debit), the maximum profit, the maximum loss and the breakeven. Enter the two strikes and the respective put premiums.
The results provided by this tool are for general informational and educational purposes only and do not constitute professional, financial, medical, legal, tax or accounting advice. Always confirm important decisions with a qualified professional and official sources.