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Put Options as Protection: CNBC Explains

CNBC Explains
Thursday, 16 Jun 2011 | 11:34 AM ET
Put Options as Protection: CNBC Explains
You may have heard traders talk about buying 'put protection' while watching CNBC or hearing financial commentary. How can put options be used as investment insurance? Salman Khan of the Khan Academy explains.

You may have heard traders talk about buying “put protection” while watching CNBC or hearing financial commentary. Put options are essentially bets that a stock will go down, but they can also be used by investors to hedge their portfolio against a downward move in stock price. How can put options be used as investment insurance? Salman Khan of the Khan Academy explains.

From this video, you’ll understand:

  • What it means to buy “put protection”
  • How the profit and loss of a put option compares to purchasing a stock



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