STRAP	PROTECTIVE PUT
About Strategy	Strap Option Strategy  Strap Strategy is similar to Long Straddle, the only difference is the quantity traded. A trader will buy two Call Options and one Put Options. In this strategy, a trader is very bullish on the market and volatility on upside but wants to hedge himself in case the stock doesn’t perform as per his expectations. This strategy will make more profits compared to long straddle sin Read more..	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. Read more..

STRAP Vs PROTECTIVE PUT - Details

	STRAP	PROTECTIVE PUT
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	PE (Put Option)
Number Of Positions	3	1
Strategy Level	Beginners	Beginners
Reward Profile	Profit Achieved When Price of Underlying > Strike Price of Calls/Puts + (Net Premium Paid/2) OR Price of Underlying < Strike Price of Calls/Puts - Net Premium Paid	Unlimited
Risk Profile	Max Loss Occurs When Price of Underlying = Strike Price of Calls/Puts	Limited
Breakeven Point	Strike Price of Calls/Puts + (Net Premium Paid/2)	Purchase Price of Underlying + Premium Paid

STRAP Vs PROTECTIVE PUT - When & How to use ?

	STRAP	PROTECTIVE PUT
Market View	Neutral	Bullish
When to use?	This strategy is used when the investor is bullish on the stock and expects volatility in the near future.	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.
Action	Buy 2 ATM Call Option, Buy 1 ATM Put Option	Buy 1 ATM Put
Breakeven Point	Strike Price of Calls/Puts + (Net Premium Paid/2)	Purchase Price of Underlying + Premium Paid

STRAP Vs PROTECTIVE PUT - Risk & Reward

	STRAP	PROTECTIVE PUT
Maximum Profit Scenario	UNLIMITED	Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario	Net Premium Paid	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid
Risk	Limited	Limited
Reward	Unlimited	Unlimited

STRAP Vs PROTECTIVE PUT - Strategy Pros & Cons

	STRAP	PROTECTIVE PUT
Similar Strategies	Strip, Short Put Ladder, Short Call Ladder	Long Call, Call Backspread
Disadvantage	• To generate profit, there should be significant change in share price. • Expensive strategy.	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.
Advantages	• Limited loss. • If share prices are moving then traders can book unlimited profit. • A trader can still book profit if the underlying falls substantially.	• Unlimited potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.