What is a Protective Put?

Long Stock/ETF + Long Put

A protective put is employed when a long put is paired with a round-lot (100 shares) of long shares.

Margin requirement for a protective put

A protective put can be purchased in a cash or margin account

Cash Accounts

Long shares and long put(s) must be fully paid for in a cash account.

Margin Accounts  

Initial below $3.00/share: 100% of the stock + the cost of the put option  

Initial $3.00/share and above: 50% of the stock + the cost of the put option

Maintenance below $3.00/share and the put option is in the money: lesser of 10% of the strike price or 100% of the stock  

Maintenance below $3.00/share and the put option is out of the money: lesser of 10% of the strike price + 100% of the out of the money amount on the put or 100% of the stock  

Maintenance above $3.00/share and the put option is in the money: lesser of 10% of the strike price or 25% of the stock  

Maintenance above $3.00/share and the put option is out of the money: lesser of 10% of the strike price + 100% of the out of the money amount of the put option or 25% of the stock