Buying a put on a stock that you already own is called a _________. The purpose is to protect the stock from a decline in value.
A) covered put
B) protective put
C) spread
D) straddle
E) Strap

Question

Quizplus · Accepted Answer

Buying a put on a stock that you already own is called a protective put, which is used to protect the stock from a decline in value. It is considered a hedging strategy for investors who are bullish on a stock but want to limit their downside risk. The other options (A, C, D, and E) do not accurately describe the scenario given in the question.

Buying a Put on a Stock That You Already Own