MARRIED PUT Meaning and
Definition
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A married put is a financial strategy used in options trading. It involves the purchase of both a stock and a put option contract simultaneously. This strategy is mainly used to protect against potential losses in the stock's value.
In a married put, an investor acquires a put option contract, which grants them the right to sell the stock at a predetermined price, known as the strike price, within a specific time period. By purchasing this put option together with the stock, the investor is safeguarding themselves against unfavorable market conditions that may lead to a decline in the stock's value.
The main objective of a married put is to limit potential losses while allowing the investor to continue benefiting from any potential gains in the stock. If the value of the stock decreases, the put option will become more valuable, offsetting the losses incurred by the decline in stock price. On the other hand, if the stock's value increases, the investor can continue holding the stock and profit from the appreciation.
This strategy is often utilized by investors who believe in the long-term potential of a stock but also want to protect themselves from short-term downturns. By employing a married put, they can secure their investments against significant losses, providing them with a level of financial security and peace of mind.
Common Misspellings for MARRIED PUT
- narried put
- karried put
- jarried put
- mzrried put
- msrried put
- mwrried put
- mqrried put
- maeried put
- madried put
- mafried put
- matried put
- ma5ried put
- ma4ried put
- mareied put
- mardied put
- marfied put
- martied put
- mar5ied put
- mar4ied put
- marrued put
Etymology of MARRIED PUT
The term "married put" is derived from the combination of two separate concepts: "married" and "put".
1. "Married": In finance, the term "married" is used to describe a combination of two related positions in options trading. It refers to an options strategy where an investor holds a long (or owned) position in the underlying asset, such as a stock, along with a long put option on the same asset. The idea is that these two positions are linked or "married" together.
2. "Put": In options trading, a put option provides the holder with the right, but not the obligation, to sell the underlying security at a specific price (known as the strike price) within a specified timeframe. The term "put" is derived from the action of "putting" the asset on the market for sale.
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