Protective Put
A protective put is long the asset and long a put — a floor under the position for a premium that bleeds.
Definition
Protective Put refers to a floor under the position for a premium that bleeds. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
Options and futures embed views on vol, skew, and path that cash markets only hint at. When a floor under the position for a premium that bleeds shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what protective put is saying. If a floor under the position for a premium that bleeds moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
State the expiry and Greek exposure; unmarked vol or pinning effects rewrite the thesis. Prefer a short written null hypothesis for Protective Put: what would falsify the current reading in the next window?
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