PUT BACKSPREAD	PROTECTIVE PUT
About Strategy	Put Backspread Option Strategy If the trader is bearish on market and bullish in volatility, he will implement this strategy. However the trader can be neutral in nature i.e. indifferent if the market moves in either of the direction, this strategy will make profits, but uptrend will give a capped income than downtrend which will give unlimited returns. 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..

PUT BACKSPREAD Vs PROTECTIVE PUT - Details

	PUT BACKSPREAD	PROTECTIVE PUT
Market View	Bearish	Bullish
Type (CE/PE)	PE (Put Option)	PE (Put Option)
Number Of Positions	2	1
Strategy Level	Advance	Beginners
Reward Profile		Unlimited
Risk Profile		Limited
Breakeven Point		Purchase Price of Underlying + Premium Paid

PUT BACKSPREAD Vs PROTECTIVE PUT - When & How to use ?

	PUT BACKSPREAD	PROTECTIVE PUT
Market View	Bearish	Bullish
When to use?		This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.
Action		Buy 1 ATM Put
Breakeven Point		Purchase Price of Underlying + Premium Paid

PUT BACKSPREAD Vs PROTECTIVE PUT - Risk & Reward

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

PUT BACKSPREAD Vs PROTECTIVE PUT - Strategy Pros & Cons

	PUT BACKSPREAD	PROTECTIVE PUT
Similar Strategies		Long Call, Call Backspread
Disadvantage		• 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		• 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.