Strategy - PUT HEDGE (hold stock, buy put) (details below)

• bullish
• bearish
  • very bearish
  • certain that the market will not rise
  • moderately bearish + fairly certain that the market will not rise
  • flat or mod. bullish in near-term (weeks) + bearish in longer term (months)
  • hold stock and bearish
• neutral
• volatile

Strategy Implementation
Put options are bought with a strike price of a.The number of put options bought will depend on the bearishness of the investor and the size of the stock holding.

Upside Potential
Profit potential is unlimited, being the ordinary return on the stock minus the fixed premium paid for the put option.

Downside Risk
Potentially limited, (depending on the hedge ratio initially applied). The gains on the put options - as the market falls - will off-set the stock losses.

Margin
Not required

Comment
Strategy characteristics are similar to a buy call.