Protective Put Calculator
A protective put acts as insurance on a stock position. By purchasing a put option against shares you already own, you guarantee a floor price at which you can sell, effectively capping your maximum loss. Like any insurance, the protection comes at a cost: the option premium. This calculator helps you evaluate a protective put trade by showing the total cost of protection, the maximum loss (including the premium), the break-even stock price at expiration, and the profit or loss at any stock price you enter. Understanding these metrics helps investors decide whether the cost of downside protection is justified given the risk of their position. Enter your stock purchase price, put strike price, premium paid, and number of shares to see the full picture.
Protective put formulas
Net P&L = (Stock Expiry - Stock Cost - Premium) x Shares + max(0, Strike - Stock Expiry) x Shares
Max Loss = (Stock Cost - Strike + Premium) x Shares
Break-Even = Stock Purchase Price + Premium
Insurance Cost = Premium x Shares
Protective put outcomes
- If the stock rises above break-even, the put expires worthless but the stock gain offsets the premium cost.
- If the stock falls below the strike price, you exercise the put and sell at the strike, limiting loss to (Stock Cost - Strike + Premium) x Shares.
- If the stock lands between the strike and break-even, you have a small net loss equal to the premium less the stock gain.
- The further the strike is from the stock price (out-of-the-money), the cheaper the premium but the less protection provided.
- At-the-money puts provide the most protection but cost the most.
Protective puts: frequently asked questions
What is a protective put?
A protective put (also called a married put or portfolio insurance) involves buying a put option while simultaneously owning the underlying shares. The put gives you the right to sell your shares at the strike price, capping your downside loss regardless of how far the stock falls.
How does a protective put limit losses?
If you own shares at $100 and buy a $95 put for $3, the worst case is selling at $95 per share (exercising the put), minus the $3 premium paid, for a net loss of $8 per share ($100 - $95 + $3). Without the put, a stock crash to $60 would cost you $40 per share. The put caps that loss.
What is the break-even price with a protective put?
Break-even = Stock Purchase Price + Premium Paid. You need the stock to rise by at least the cost of the put premium for the position to be profitable at expiration. The premium is the 'insurance cost' of the strategy.
When should I use a protective put?
Protective puts are useful when you want to hold a stock for tax or other reasons (e.g., to qualify for long-term capital gains) but want downside protection during a period of uncertainty. They are also used to protect a large concentrated position ahead of a potentially volatile event such as an earnings release.
How does a protective put differ from a stop-loss order?
A stop-loss order sells your shares automatically when the price falls to a trigger level, but execution is not guaranteed (slippage can occur in fast markets). A protective put guarantees your right to sell at the strike price, even in a crash. However, the put costs a premium while a stop-loss order is free.
Official sources
- OCC (Options Clearing Corporation): Options Education Center.
- SEC Investor Education: Options.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.