60-Day Plan139 / 143
MediumOptions & Greeks

Worst Case with a Protective Put

BarclaysJ.P. Morgan

You own a stock bought at 50andbuyaputstruckat50 and buy a put struck at 45 for a $2 premium. What is the most you can lose on the combined position (in dollars per share)?

Hints

The put floors your sale price at 45.

Don’t forget the premium you paid.

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