With a protective put, the difference between the stock price and the striking price is like
A) a margin requirement.
B) an automobile insurance policy deductible.
C) a down payment.
D) a futures good faith deposit.

Question

Quizplus · Accepted Answer

A protective put acts like an insurance policy for a stock investment, where the difference between the stock price and the strike price is akin to the deductible in an insurance policy. This is because the investor pays a premium to protect against downside risk, and the strike price determines the level at which protection kicks in, similar to how a deductible works in insurance.

With a Protective Put, the Difference Between the Stock Price