Definition of Married put:
Put option whose purchaser owns the underlying stock. It protects against the decline in the stocks price (which can be sold at higher price before the options expiration date) but expires worthless if the stocks price increases or remains the same.
The benefit is that the investor can lose a small but limited amount of money on the stock in the worst scenario, yet still participates in any gains from price appreciation. The downside is that the put option costs a premium and it is usually significant.
A married put is the name given to an options trading strategy where an investor, holding a long position in a stock, purchases an at-the-money put option on the same stock to protect against depreciation in the stock's price.
How to use Married put in a sentence?
- Put options vary in price depending on the volatility of the underlying stock.
- This option strategy protects an investor from drastic drops in the price of the underlying stock.
- The cost of the option can make this strategy prohibitive.
- The strategy might work well for low-volatility stocks where investors are worried about a surprise announcement that would drastically change the price.
Meaning of Married put & Married put Definition