LONG STRANGLE	PROTECTIVE PUT
About Strategy	Long Strangle Option Strategy A Strangle is similar to Straddle. In Strangle, a trader will purchase one OTM Call Option and one OTM Put Option, of the same expiry date and the same underlying asset. This strategy will reduce the entry cost for trader and it is also cheaper than straddle. A trader will make profits, if the market moves sharply in either direction and gives extra-ordinary returns in the 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..

LONG STRANGLE Vs PROTECTIVE PUT - Details

	LONG STRANGLE	PROTECTIVE PUT
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	PE (Put Option)
Number Of Positions	2	1
Strategy Level	Beginners	Beginners
Reward Profile	Unlimited	Unlimited
Risk Profile	Limited	Limited
Breakeven Point	Lower Breakeven Point = Strike Price of Put - Net Premium, Upper Breakeven Point = Strike Price of Call + Net Premium	Purchase Price of Underlying + Premium Paid

LONG STRANGLE Vs PROTECTIVE PUT - When & How to use ?

	LONG STRANGLE	PROTECTIVE PUT
Market View	Neutral	Bullish
When to use?	This strategy is used in special scenarios where you foresee a lot of volatility in the market due to election results, budget, policy change, annual result announcements etc.	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.
Action	Buy OTM Call Option, Buy OTM Put Option	Buy 1 ATM Put
Breakeven Point	Lower Breakeven Point = Strike Price of Put - Net Premium, Upper Breakeven Point = Strike Price of Call + Net Premium	Purchase Price of Underlying + Premium Paid

LONG STRANGLE Vs PROTECTIVE PUT - Risk & Reward

	LONG STRANGLE	PROTECTIVE PUT
Maximum Profit Scenario	Profit = Price of Underlying - Strike Price of Long Call - Net Premium Paid	Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario	Max Loss = Net Premium Paid	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid
Risk	Limited	Limited
Reward	Unlimited	Unlimited

LONG STRANGLE Vs PROTECTIVE PUT - Strategy Pros & Cons

	LONG STRANGLE	PROTECTIVE PUT
Similar Strategies	Long Straddle, Short Strangle	Long Call, Call Backspread
Disadvantage	• Require significant price movement to book profit. • Traders can lose more money if the underlying asset stayed stagnant.	• 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	• Able to book profit, no matter if the underlying asset goes in either direction. • Limited loss to the debit paid. • If the underlying asset continues to move in one direction then you can book Unlimited profit .	• 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.