Married Puts Option Trading Strategy – Know Everything

Married Puts is an option trading strategy used for hedging purposes. This type of options strategy used by traders only.

Know everything about this strategy here.

About Married Puts

Married Puts is a type of Options Trading Strategy. The options traders do not use Married puts options trading strategy frequently.

Although, it has its own advantages and serves its own purpose. It is a scheme which we use for hedging purposes for traders who are thinking of financing in stocks.

It seems almost the same when compared to the protective put. A protective put is also a type of hedging strategy, but there seems to be a few discrepancies between the two strategies.

There are many situations where the traders use married puts extensively with little knowledge about it.

Open a Demat Account Now! –  Apply this Options Strategy

    Fill Your Details Here
    1. Open Demat Account

    Strategy of Married Puts

    The traders use protective put to protect surplus amounts that they earned from long stock positions.

    They also consider what they can use at a certain point after the long stock position is good to go. It is the same time the price changes.

    The married put, on the other hand, is what we use in order to limit probable losses. They could occur out of a long stock position.

    They use it at the exact same time when a long stock position enters. A trader typically uses a married put as a type of insurance at the time of purchasing a stock.

    It is to fulfill any kind of potential loss when the cost of the stock falls instead of rising up. There is typically an amount which we potentially link with picking that insurance.

    Nevertheless, the married put, in reality, offers the absolute best of both the worlds. The potential for an infinite surplus in case the stock cost rises up.

    It is a restricted downside in case it goes down.

    Learn everything about Option Trading & start making big money in Options Market

    Introduction to Option TradingDelta Neutral Option Strategy
    Options Trading for BeginnersFiduciary Call Option Strategy
    How to Start Options Trading?Stock Replacement Option Strategy
    Choose the Right Options StrategyStock Repair Option Strategy
    Become an Advanced Option TraderRisk Reversal Option Strategy

    Usability of Married Puts

    It is a very easy scheme to use as well; one just has to purchase adequately at the money put options in order to fulfill the shares one is purchasing.

    The price of all these options is generally the price of utilizing the married put. In case the stock really goes down in worth, then one can try their option for selling the stock. They can do it probably at the cost they paid for that.

    In case the stock rises up then, keeping in mind the growth in the cost of the stock to be larger than the price of the puts, one will produce a profit.

    The only actual disadvantage of this married puts options trading strategy is that the price will dissolve those profits.

    It could happen a little and in case the cost of the stock does not move even a bit; one will most probably lose the amount they emptied on the options.

    Nevertheless, that is the cost one pays to limit their potential losses.

    Find out some of the Best Options Trading Strategies here

    Neutral Option Trading StrategiesSynthetic Option Trading Strategy
    Volatile Option Trading StrategiesArbitrage Option Trading Strategy
    Bullish Option Trading StrategiesGamma Neutral Options Strategy
    Bearish Option Trading StrategiesProtective Puts Calls Options Strategy

    Example of Married Puts Option Trading Strategy

    Now, for instance, assume that a stock is trading at INR 5000 and someone purchases the underlying shares at INR 5000.

    In case the person wanted to protect against the possibility of the stock falling below INR 4000, they could simply buy an INR 4000 put. Now assume that the premium for the put is INR 400.

    Now, if someone buys the stock at INR 5000 along with an INR 4000 put for INR 400, and the stock declined to whichever cost less than or equal to INR 4000, one would possibly exercise the put and get rid of the stock at INR 4000.

    That would turn into a loss of INR 100 per share, and one would also lose the INR 400 premium for total losses of INR 500.

    In case the stock rose to INR 7000 and the INR 4000 put expired without any worth, one would lose an INR 400 in premium paid, but have INR 2000 in unexpected profit on the stock at that point in time. However, the stock would need to increase to INR 5400 in order to cover the loss of INR 400.

    Married Puts – Conclusion

    Risk reversal may possibly be of use to explain a hedging strategy, usually that the commodities traders use. It is in order to safeguard against possible adverse price actions in an owned asset.

    This risk reversal strategy is what the traders use by trading out of the money calls. They also start purchasing out of the money puts on underlying security which they own.

    Open a Demat Account Now! –  Apply this Options Strategy

      Fill Your Details Here
      1. Open Demat Account

      More Articles on Options Trading

      Live Nifty Option Chain
      Live NSE Option Chain
      Open Interest Stock Options
      Open Interest Index Options
      Most Active Index Options
      Most Active Stock Options
      Put Call Ratio


      Leave a Reply

      Your email address will not be published. Required fields are marked *

      Get 90% Discount on Brokerage Now! Open Demat Account

      Share your details & Become Sub Broker Now!

        1. Become Sub Broker

        Offer valid for limited time.


        Share your details & Open Demat A/C Now!

          1. Open Demat Account

          Offer valid for limited time.


          Share your details & Get IPO Allotment Now!

            1. Invest in IPO

            Offer valid for limited time.


            Share your details & Invest in PMS Now!

              1. Invest in PMS / AIF / PCG

              Offer valid for limited time.