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1 strategies and tactics for Protective Put

What is Protective Put strategy?

Every great achievement starts with a well-thought-out plan. It can be the launch of a new product, expanding into new markets, or just trying to increase efficiency. You'll need a delicate combination of strategies and tactics to ensure that the journey is smooth and effective.

Crafting the perfect Protective Put strategy can feel overwhelming, particularly when you're juggling daily responsibilities. That's why we've put together a collection of examples to spark your inspiration.

Transfer these examples to your app of choice, or opt for Tability to help keep you on track.

How to write your own Protective Put strategy with AI

While we have some examples available, it's likely that you'll have specific scenarios that aren't covered here. You can use our free AI generator below or our more complete goal-setting system to generate your own strategies.

Protective Put strategy examples

You'll find below a list of Protective Put tactics. We also included action items for each template to make it more practical and useful.

Strategies and tactics for developing an Option Hedging Strategy

  • ⛳️ Strategy 1: Implement the protective put strategy

    • Identify the stock or portfolio you want to hedge
    • Purchase an equivalent amount of put options for the stock at a strike price close to the current stock price
    • Choose an expiration date for the put options that aligns with your investment timeline
    • Calculate the potential losses to ensure they are capped by the protection provided by the puts
    • Analyse historical stock performance to set realistic profit expectations
    • Keep an eye on option premiums to manage costs effectively
    • Review the option market regularly and adjust your position as needed
    • Develop a plan to roll over the options if the expiration date approaches with unfavourable stock price movement
    • Evaluate early exercise of the options if the stock approaches the strike price suddenly
    • Monitor market indicators and adjust the strategy as per changing economic conditions
  • ⛳️ Strategy 2: Utilise collar strategy for hedging

    • Identify the stock holding you wish to protect
    • Buy put options for each stock you plan to hedge
    • Sell call options at a higher strike price than the purchased put options
    • Select expiration dates that fit your investment duration for both put and call options
    • Calculate the net cost to ensure minimal expense by considering premiums spent and earned
    • Establish target exit points for the stock's performance to guide your selling decisions
    • Regularly assess volatility in the market to adjust strike prices if necessary
    • Research and choose stocks with relatively stable price history for implementation
    • Maintain a proper record of transaction costs associated with option trades
    • Assess the strategy execution before the expiry and decide on rolling over or closing positions
  • ⛳️ Strategy 3: Employ strangle strategy with risk management

    • Choose a volatile stock or asset suitable for this strategy
    • Purchase out-of-the-money call and put options with the same expiration date
    • Set different strike prices for the call and put options, both out-of-the-money
    • Analyse past price movements to determine potential future volatility
    • Determine the maximum loss (limited to premiums paid) and potential profit (theoretically unlimited)
    • Keep an eye on market events that could cause significant price swings
    • Set alerts for price movement nearing the strike prices to promptly decide on exercising the options
    • Allocate specific capital to this strategy to prevent over-investment and manage risk
    • Evaluate the strategy toward expiration and consider selling or buying offsetting positions
    • Document and analyse the outcome of each execution for continuous improvement

How to track your Protective Put strategies and tactics

Having a plan is one thing, sticking to it is another.

Having a good strategy is only half the effort. You'll increase significantly your chances of success if you commit to a weekly check-in process.

A tool like Tability can also help you by combining AI and goal-setting to keep you on track.

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Planning resources

OKRs are a great way to translate strategies into measurable goals. Here are a list of resources to help you adopt the OKR framework:

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