Protecting shares: the protective put and the collar
1In one sentence
A protective put is insurance for shares you own: if the stock falls, the put limits the loss. A collar pays for that insurance by selling a call above.
The protective put keeps all your upside. The collar costs less (sometimes nothing) but caps your upside at the call's strike.
2Try it: switch, then drag
You own 100 NVDA shares bought at $215. Tap a strategy, then drag the dot.
Buy the $200 put for $4. Your floor is $200, for a cost of $400.
33 words to know
Floor$200 put
The lowest price you can sell your shares at, however far the stock falls.
Insurance costthe put's premium
What you pay for protection. If the stock doesn't fall, it's money spent, like any insurance.
Cap$235 call
In a collar, the price above which your gains stop, in exchange for lowering the cost.
4Watch out
- Insurance isn't free. Buying puts every month adds up and can eat most of a stock's gains.
- Collars cap the upside. If the stock jumps, you sell at the call's strike and miss the rest.
- Protection expires. When the put expires, the floor is gone. You'd need a new put to stay protected.
5Quick check · 3 questions · optional
Now try it for real
See what the Co-Pilot says today about NVDA, TSLA and 8 more stocks, then drag the dot on a real price.
Common questions
What is a protective put?
Buying a put on shares you own, so you can sell them at the put's strike if the price falls. It works like insurance and costs the put's premium.
What is a collar in options?
Owning shares, buying a put below the price for protection and selling a call above it to pay for the put. It limits both your loss and your gain.
Is a collar free?
It can be close to free if the call's premium covers the put's, but you give up gains above the call's strike.
Education only. Examples use illustrative numbers. Not financial advice; you make your own decisions.