In the context of insurance,protective put buyers who choose lower exercise prices are essentially using higher deductibles.

Question

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Protective put buyers who choose lower exercise prices (i.e. a lower strike price for the put option) are essentially paying a lower premium for their protection but accepting a higher deductible in the event of a loss. This is similar to choosing a higher deductible in an insurance policy.

In the Context of Insurance,protective Put Buyers Who Choose Lower