Max profit
Unlimited
Protective put calculator
Owns shares and buys a put as insurance. Enter your strikes and price to see the maximum profit, maximum loss, breakeven, profit chance and expected value.
Leave the price empty to estimate it from implied volatility. Results are per contract (100 shares), held to expiration.
Estimated debit: $124.38 per contract (from implied volatility; type your real price above)
Max loss
−$524.38
Breakeven
$101.24
Profit chance ?
41.7%
Expected value ?
−$45.74
Get the full verdict on this trade
Free, no account. The app adds volatility skew, exit plans, position sizing and a plain-English verdict.
How to use the protective put calculator
- Enter the stock's price, the days left until expiration and the implied volatility from your option chain.
- Enter each strike. Then type the price you'd pay per share, or leave it empty for an estimate.
- Add the stock's realized volatility to see expected value: what the trade makes on average if the stock keeps moving the way it has been.
Worked example
Say a stock trades at $100, options price in 25% implied volatility, and the stock has really been moving about 20% a year (its realized volatility). With 30 days to expiration, a protective put at strike 96 costs about $1.24 per share, or $124.38 per contract.
- Max profit: unlimited
- Max loss: $524.38
- Breakeven: $101.24
- Profit chance, market-implied: 41.7%
- Expected value with 20% realized volatility: −$45.74 per contract
The expected value is negative here because the stock is assumed to move less than options price in (20% vs 25%), so the options are expensive relative to the likely move. If the stock moves more than implied, the same trade can come out ahead on average. That gap between implied and realized volatility is what the full app checks first.
What is a protective put?
A protective put holds 100 shares and buys a put below the price.
How it makes or loses money
Above the put strike, you own the shares as usual, minus the cost of the put. Below it, the put stops further losses.
When traders use it
Used to protect gains or hold through a risky event.
Profit and loss at expiration
- Max profit: uncapped, less the put's cost
- Max loss: share price minus put strike, plus the debit
The Greeks
| Greek | Sign |
|---|---|
| Delta | + |
| Theta | − |
| Vega | + |
| Gamma | + |
What to watch out for
- Insurance costs money every time; it's a drag if nothing happens.
- Buying puts when implied vol is high costs more.
Questions
What is the max profit on a protective put?
Uncapped, less the put's cost. In the example above that's unlimited per contract.
What is the max loss on a protective put?
Share price minus put strike, plus the debit. In the example above that's $524.38 per contract.
What does "profit chance" mean here?
It's the market-implied chance that the trade finishes with any profit at expiration, if the stock moves as much as implied volatility prices in. It assumes you hold to expiration and uses one volatility for every strike. A high profit chance doesn't mean a good trade: small, frequent wins can still lose money overall if the losses are large.
What's the difference between implied and realized volatility?
Implied volatility is how much movement option prices assume. Realized volatility is how much the stock has actually been moving. Option sellers tend to come out ahead on average when realized stays below implied, and buyers when it runs above. Expected value in this calculator uses the realized volatility you enter.
Is a protective put a good trade?
This calculator can't tell you that, and neither can anyone who doesn't know your account, goals and risk tolerance. It shows the math for the numbers you enter. Whether those numbers hold up depends on the price you actually get, how the stock moves and how you manage the trade.