To protect the value of a stock held in a portfolio against the risk of a decline in the market value, an investor would follow:

Question

Quizplus · Accepted Answer

A protective put buying strategy allows an investor to purchase a put option for stocks they already own. This strategy provides insurance against a decline in the stock price, as the investor can sell the stock at the strike price of the put option, regardless of how low the market price of the stock falls.

To Protect the Value of a Stock Held in a Portfolio