A protective put entails the purchase of a put option on a stock to limit the downside risk associated with owning that stock.

Name: A protective put entails the purchase of a put option on a stock to limit the downside risk associated with owning that stock.
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A protective put strategy involves buying a put option for a stock that one owns, which serves as insurance against a significant drop in the stock's price, thereby limiting the downside risk.

A Protective Put Entails the Purchase of a Put Option