A protective put written on a portfolio (rather than a single stock)is known as:
A)portfolio insurance.
B)put-call parity.
C)a warrant.
D)Black-Scholes.
E)diversification.

Question

Quizplus · Accepted Answer

A protective put is a hedging strategy used to limit potential losses in a portfolio. It involves purchasing put options for the same number of shares as the portfolio, giving the investor the right to sell the portfolio at a predetermined strike price. This strategy is known as portfolio insurance.

A Protective Put Written on a Portfolio (Rather Than a Single