Married Put Return
The married put is a bullish strategy and consists of the purchase of a long stock and a long put option. The married put has limited downside risk provided by the purchased put option and a potential return which is infinite.
Calculations for the Married Put Strategy are:
Net Debit = Stock Price + Put Ask Price
Break Even = Net Debit
Maximum Risk = Net Debit - Put Strike Price
% Max Risk = Maximum Risk / Net Debit
Maximum Profit = Unlimited
Example 1: Stock XYZ at $49.90 per share
Buy 100 shares stock XYZ at $49.90
Buy 1 contract 55 strike Put (ITM) for $6.10
Net Debit = $49.90 + $6.10 = $56.00
Break Even = $56.00
Maximum Risk = $56.00 - $55.00 = $1.00
% Max Risk = $1.00 / $56.00 = 1.8%
Read more about this topic: Stock Option Return
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