Married Put and Stock

A married put is a position built by buying shares of stock and, at the same time, buying a put option on that same stock. A put option is a contract that gives its owner the right (but not the obligation) to sell a specific number of shares at a fixed price, called the strike price, on or before a set expiration date. Pairing the two trades together is what earns the name "married" — the stock and the put are entered as one combined position, not as two unrelated trades.

The logic is simple: owning the stock lets you profit if the price rises, while owning the put acts like an insurance policy in case the price falls. If the stock drops sharply, you can exercise the put and sell your shares at the strike price no matter how low the market price has gone, which puts a floor under your losses. If the stock rises instead, the put simply expires worthless and you keep the gains on the stock, minus what you paid for the put.

The nuance beginners miss is that this "limited risk" isn't free or absolute. You pay a premium for the put upfront, and that cost is a real, certain loss if the stock doesn't fall — so the true maximum loss is the gap between your stock purchase price and the put's strike, plus the premium paid. The protection also only lasts as long as the put contract is alive; once it expires, you're back to holding stock with no downside cushion unless you buy another put.

It's also worth separating this from a "protective put," a term often used interchangeably. Technically a married put refers specifically to buying the stock and put simultaneously, while a protective put can be added to shares you already owned before. The economics of the risk protection are the same either way.