Options for the Beginner and Beyond: Unlock the Opportunities and Minimize the Risks

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Here are some variations of the married put strategy:

• There are times to employ this strategy other than when you first buy a stock. Suppose you already own a stock that has provided a nice profit, but there is an upcoming special event (earnings report, FDA approval, court decision, and so on) that could send it into a steep decline. Use a married put to get past the special event. Then you will be much better placed to decide whether you should continue to hold the stock.

• For more-volatile stocks, the protective put that you would like to own may be rather expensive. You can reduce the cost by using a vertical Bear Put Spread instead of a simple protective put. To create the spread, buy the put you want for protection and then sell ...