A protective put is a costless way of eliminating the downside risk if holding stock.

Name: A protective put is a costless way of eliminating the downside risk if holding stock.
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Question

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A protective put involves purchasing a put option on a stock, which incurs a cost. This cost is a premium paid to the option seller for the right to sell the stock at a specified price (strike price) before the option's expiration date. While it does protect against downside risk, it is not costless.

A Protective Put Is a Costless Way of Eliminating the Downside