How to use this calculator
- Enter your stock price or cost basis and the number of shares owned.
- Enter the put strike you're buying and the premium paid per share.
- Enter the days to expiration.
- Read the result: the protected floor, maximum loss, breakeven, and the cost of protection with its annualized rate.
What it tells you: how low your loss is capped once you insure your shares with a put, and what that protection costs as a yearly rate.
How this calculator works
A protective put is two positions held together: long stock you already own and a long put bought to insure it. The put gives you the right to sell at its strike, so once the stock falls below that strike, every further dollar lost on the shares is matched dollar- for-dollar by the put. Your downside is floored; your upside is left open, dragged only by the premium you paid for the insurance.
Enter your cost basis, the put strike and the premium and the calculator returns the full picture. The protected floor is the strike — the price you can always sell at. The maximum loss is your cost plus the premium minus the strike, times your shares. The breakeven sits one premium above your entry, because the stock has to recover the cost of the put first. The cost of protection is that premium as a percent of the share price, annualized so you can compare puts of different lengths.
Protective put vs a stop-loss
Both cap your downside, but only one of them guarantees the price. A stop-loss order sells your shares once the stock trades through a level — but in a gap down or an overnight move it can fill far below that level, and once it triggers you are out of the position entirely. A protective put guarantees a sale at the strike no matter how violent the move, and you keep the shares and the recovery if the stock bounces. That certainty is what the premium buys. Use the Expected Move Calculator to pick a strike that matches the move the market is pricing in.
Worked example
A fixed, hypothetical illustration — not live market data.
You own 100 shares of a hypothetical stock at $100. To protect them for 90 days you buy the $95 put for $3.00 per share.
- Cost basis (stock + put): ($100 + $3.00) × 100 = $10,300.
- Protected floor: $95 — you can always sell there, however far the stock falls.
- Maximum loss: ($95 − $100 − $3.00) × 100 = −$800, about 7.77% of cost.
- Breakeven: $100 + $3.00 = $103.
- Cost of protection: $3.00 ÷ $100 = 3.00% for 90 days (≈12.17% annualized).
- Downside to floor: ($100 − $95) ÷ $100 = 5.00% you absorb before the put engages.
Common mistakes
- Forgetting the premium drag. Protection is not free — the stock must rise past your breakeven, one premium above entry, before the hedged position profits.
- Over-insuring. Buying expensive at-the-money puts repeatedly can eat more than the crashes they prevent. Match the strike to the risk you actually want to offload.
- Buying protection when IV is high. A long put is long premium — rich implied volatility makes the insurance expensive. Check the IV Rank first.
- Ignoring the cheaper collar. Selling a call against the position can finance most or all of the put — see the Collar Calculator.
- Letting the put expire mid-decline. The floor only holds while the put is alive; roll it out before expiration if you still want the protection.
Frequently asked questions
What is a protective put?
A protective put (or married put) is long stock plus a long put bought to insure it. The put gives you the right to sell at its strike, so no matter how far the stock falls, your position can lose no more than the gap between your cost and the strike, plus the premium you paid. Your upside stays open — it is only dragged down by the cost of the put, like an insurance premium on shares you own.
How is the maximum loss calculated?
Max loss per share = stock price + put premium − put strike, times your share count. You bought the stock at your cost and paid the premium, but you can always sell at the strike, so that gap is the worst case. For an at-the-money put the max loss is just the premium; for an out-of-the-money put it is the premium plus the drop from your cost down to the strike.
How much does the protection cost?
The cost of protection is the put premium expressed as a percent of the stock price — your insurance rate for the life of the option. The calculator also annualizes it so you can compare puts of different lengths: a 3% premium over 90 days is roughly 12% a year. Cheaper, further out-of-the-money puts cost less but leave a bigger "deductible" you absorb before protection starts.
Where is the breakeven?
Breakeven = stock price + put premium. Because you paid for the insurance, the stock has to rise by the premium before the combined position is back to even. Above breakeven your gains are unlimited (less the premium); below the strike your loss is fixed at the floor.
Should I buy an at-the-money or out-of-the-money put?
It is the classic insurance trade-off. An at-the-money put protects from your entry price down but costs the most premium. An out-of-the-money put is cheaper, but you self-insure the first drop — from your cost down to the strike — before it engages, the same way a higher deductible lowers an insurance premium. Match the strike to how much downside you are willing to absorb and to the expected move.
Protective put vs a stop-loss order — what is the difference?
A stop-loss sells your shares once the price trades through a level, but it can fill far below that level in a gap or overnight, and once triggered you are out of the stock. A protective put guarantees a sale price at the strike no matter how violent the move, and you keep the shares and the upside if it recovers. The certainty costs a premium — that is what you are paying for.
When should I use a protective put?
When you want to keep a stock you own but cap the downside over a specific window - earnings, a nervous market, a position you cannot afford to see crater - the put sets a hard floor while you keep all the upside above it. Treat it as insurance you pay a premium for, most worth buying when you have real gains to protect or a known risk ahead. Skip it as a permanent habit: buying puts month after month is a steady drag that can outweigh the gains you are protecting, so reserve it for when the risk is concrete. If you are willing to cap your upside to fund it, a collar makes the same protection far cheaper.
Related tools and guides
Want to finance the put by capping your upside? See the Collar Calculator. Earning income on shares instead of insuring them? Compare with the Covered Call Calculator.
Size the strike to the move with the Expected Move Calculator, check whether premium is rich with the IV Rank Calculator, build any custom structure in the Payoff Diagram Builder, and look up any term in the options glossary.
Educational tool only. Nothing here is financial advice. A protective put caps downside but costs premium that drags on returns, and early assignment, dividends and rolling can change the real-world outcome. Size positions accordingly.