What strategy could be considered insurance for an investment in a portfolio of shares?

Question

Quizplus · Accepted Answer

A protective put is a strategy that involves buying put options for the shares in a portfolio. This option acts as "insurance" as it gives the investor the right to sell the shares at a predetermined price (the strike price) regardless of the actual market price. If the market price of the shares decreases, the investor can sell them at the strike price and limit their losses. Therefore, a protective put can be considered insurance for an investment in a portfolio of shares.

What Strategy Could Be Considered Insurance for an Investment in a Portfolio