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protective put

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Financial Dictionary

protective put

A put option owned in conjunction with the corresponding stock. A protective put guarantees the holder will receive at minimum proceeds that equal the exercise price of the put. For example, an investor could hold 100 shares of Coca-Cola while also holding a put on Coca-Cola stock. The protective put shelters the investor in case the stock's price declines in the market. Also called married put.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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