Married Put Explained

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Married Put

What Is a Married Put?

A married put is the name given to an options trading strategy where an investor, holding a long position in a stock, purchases an at-the-money put option on the same stock to protect against depreciation in the stock’s price.

The benefit is that the investor can lose a small but limited amount of money on the stock in the worst scenario, yet still participates in any gains from price appreciation. The downside is that the put option costs a premium and it is usually significant.

A married put may be contrasted with a covered call.

Key Takeaways

  • This option strategy protects an investor from drastic drops in the price of the underlying stock.
  • The cost of the option can make this strategy prohibitive.
  • Put options vary in price depending on the volatility of the underlying stock.
  • The strategy might work well for low-volatility stocks where investors are worried about a surprise announcement that would drastically change the price.

NYIF Instructor Series: Married Put

How a Married Put Works

A married put works similarly to an insurance policy for investors. It is a bullish strategy used when the investor is concerned about potential near-term uncertainties in the stock. By owning the stock with a protective put option, the investor still receives the benefits of stock ownership, such as receiving dividends and having the right to vote. In contrast, just owning a call option, while equally as bullish as owning the stock, does not confer the same benefits of stock ownership.

Both a married put and a long call have the same unlimited profit potential, as there is no ceiling on the price appreciation of the underlying stock. However, profit is always lower than it would be for just owning the stock, decreased by the cost or premium of the put option purchased. Reaching breakeven for the strategy occurs when the underlying stock rises by the amount of the options premium paid. Anything above that amount is profit.

The benefit of a married put is that there is now a floor under the stock limiting downside risk. The floor is the difference between the price of the underlying stock, at the time of the purchase of the married put, and the strike price of the put. Put another way, at the time of the purchase of the option, if the underlying stock traded exactly at the strike price, the loss for the strategy is capped at exactly the price paid for the option.

A married put is also considered a synthetic long call, since it has the same profit profile. The strategy has a similarity to buying a regular call option (without the underlying stock) because the same dynamic is true for both: limited loss, unlimited potential for profit. The difference between these strategies is simply how much less capital is required in simply buying a long call.

Married Put Example

Let’s say a trader chooses to buy 100 shares of XYZ stock for $20 per share and one XYZ $17.50 put for $0.50 (100 shares x $0.50 = $50). With this combination, they have purchased a stock position with a cost of $20/share but have also bought a form of insurance to protect themselves in case the stock declines below $17.50 before the put’s expiration. For a put to be considered “married,” the put and the stock must be bought on the same day, and the trader must instruct their broker that the stock they have just purchased will be delivered if the put is exercised.

When to Use a Married Put

Rather than a profit-making strategy, a married put is a capital-preserving strategy. Indeed, the cost of the put portion of the strategy becomes a built-in cost. The put price reduces the profitability of the strategy, assuming the underlying stock moves higher, by the cost of the option. Therefore, investors should use a married put as an insurance policy against near-term uncertainty in an otherwise bullish stock, or as protection against an unforeseen price breakdown.

Newer investors benefit from knowing that their losses in the stock are limited. This can give them confidence as they learn more about different investing strategies. Of course, this protection comes at a cost, which includes the price of the option, commissions, and possibly other fees.

Married Put

The Married Put is an option strategy in which the options trader buys an at-the-money put option while simultaneously buying an equivalent number of shares of the underlying stock.

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Married Put Construction
Long 100 Shares
Buy 1 ATM Put

A married put strategy is usually employed when the options trader is bullish on a stock, wants the benefits of stock ownership (dividends, voting rights, etc.), but wary of uncertainties in the near term.

Unlimited Profit Potential

As its profit potential is the same as a long call’s, the married put is also known as a synthetic long call.

The formula for calculating profit is given below:

  • Maximum Profit = Unlimited
  • Profit Achieved When Price of Underlying > Purchase Price of Underlying + Premium Paid
  • Profit = Price of Underlying – Purchase Price of Underlying – Premium Paid

Limited Risk

The formula for calculating maximum loss is given below:

  • Max Loss = Premium Paid + Commissions Paid
  • Max Loss Occurs When Price of Underlying

Breakeven Point(s)

The underlier price at which break-even is achieved for the married put position can be calculated using the following formula.

  • Breakeven Point = Purchase Price of Underlying + Premium Paid


An options trader is very bullish on XYZ stock but worried about near term uncertainties. He establishes a married put position by purchasing shares of XYZ stock trading at $52 in June while simultaneously buying SEP 50 put options trading at $2 to protect his share purchase.

Maximum loss occurs when the stock price dive to $50 or below at expiration. With the SEP 50 puts in place, even if the stock price dive to $30, he will still be able to sell his holdings for $50. Therefore, his maximum loss is limited $2 in paper loss + $2 in premium paid for the options = $4.

On the upside, there is no limit to the profits should the stock price head north. Suppose the stock price goes up to $70, his profit will be $18 in paper gain less $2 paid for the put protection = $16.

However, if the stock price remain unchanged at expiration, he will still lose $2 in premium paid for the put insurance.

Note: While we have covered the use of this strategy with reference to stock options, the married put is equally applicable using ETF options, index options as well as options on futures.


For ease of understanding, the calculations depicted in the above examples did not take into account commission charges as they are relatively small amounts (typically around $10 to $20) and varies across option brokerages.

However, for active traders, commissions can eat up a sizable portion of their profits in the long run. If you trade options actively, it is wise to look for a low commissions broker. Traders who trade large number of contracts in each trade should check out as they offer a low fee of only $0.15 per contract (+$4.95 per trade).

Similar Strategies

The following strategies are similar to the married put in that they are also bullish strategies that have unlimited profit potential and limited risk.

What Is a Married Put?

Here’s the basic setup of a married put (protective put), along with how to calculate the position’s maximum gain, maximum loss, and breakeven point.

There are plenty of ways to profit on a stock’s movement, beyond investing in the actual stock itself. Options provide a nearly endless array of strategies, due to the countless ways you can combine buying and selling call option(s) and put option(s) at different strike prices and expirations.

A call is an options contract that gives the owner the right to purchase the underlying security at the specified strike price at any point up until expiration. A put is an options contract that gives the owner the right to sell the underlying asset at the specified strike price at any point up until expiration.

One of the most basic protective positions is a married put, also known as a protective put.

Buying some protection

A married put is a strategy where a long investor purchases a put option that typically will have a strike price lower than the current stock price. By owning the put as well as the stock, the investor is protected from any downside below the put’s strike price, since the investor can exercise the put and sell the underlying. Simply put (no pun intended), buying a protective put is similar to buying insurance against a stock’s decline.

Image source: The Motley Fool.

For example, let’s say that a stock is trading at $50 and you purchase the underlying shares at $50. If you wanted to protect against the possibility of the stock falling below $40, you could purchase a $40 put. Let’s assume that the premium for the put is $4.

Maximum loss: cost basis of underlying stock minus strike price, plus premium paid

The most that you can lose on a protective put is the difference between what you paid for the stock and the strike price of the put, in addition to the premium paid for the put.

In this example, if you bought the stock at $50 along with a $40 put for $4, and the stock declined to any price less than or equal to $40, you would exercise the put and sell the stock at $40. That would translate into a loss of $10 per share, and you would also lose the $4 premium for total losses of $14.

Maximum gain: unlimited

A married put’s theoretically maximum gain is unlimited, simply due to the long stock position since stock prices have no theoretical maximum limit. Naturally, stock prices do not actually increase to infinity, but over time the stock price may continue rising. However, any gains in the underlying stock would be partially offset by losing the premium paid once the put option expires worthless.

In this example, if the stock rose to $70 and the $40 put expired worthless, you would lose the $4 in premium paid, but have $20 in unrealized gains on the stock at that time.

Breakeven: cost basis of underlying stock plus premium paid

In order to breakeven on a married put, the underlying stock price must increase enough to offset the amount of premium paid.

In this example, the stock would need to increase to $54 in order to cover the $4 premium paid.

Your mileage may vary

It’s worth noting that the above calculations for max gain, max loss, and breakeven become more complicated if you are not establishing a stock position at the same time.

For instance, if you’ve held the stock for an extended period of time and have a very low cost basis on the stock, then the max gain, max loss, and breakeven points will differ. Investors will sometimes use protective puts as a way to protect significant gains over time, or may purchase additional puts for continued protection over time as subsequent puts expire.

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