272 Part Ill: Put Option Strategies 
TABLE 17-1. 
Results at expiration on a protected stock holding. 
XYZ Price at Stock Put 
Expiration Profit Profit 
30 -$2,200 +$1,800 
40 - 1,200 + 800 
50 200 200 
54 + 200 200 
60 + 800 200 
70 + 1,800 200 
80 + 2,800 200 
FIGURE 17-1. 
long common stock and long put. 
C: 
0 
e ·5. 
X 
w 
1i'i $0 Cf) 
Cf) 
0 ..J 
c5 
e 
0. 
-$400 
, 
, , , 
Long ,' 
Stock ,, 
,, ,, 
, , , 
48 50 ,'52 
, ,, , 
,, , 
, 
, ,, , 
, , ,, 
Stock Price at Expiration 
,, ,, 
,, ,, 
, , 
Total 
Profit 
-$ 400 
400 
400 
0 
+ 600 
+ 1,600 
+ 2,600 
one's profit potential on the common stock, but rather provides the stock owner with 
protection, eliminating the possibility of any devastating loss on the stock holding during 
the life of the put. In all the put buying strategies discussed in this chapter and Chapter 
18, the put must be paid for in full. That is the only increase in investment. 
Although any common stockholder may use this strategy, two general classes of 
stock owners find it particularly attractive: First, the long-term holder of the stock 
who is not considering selling the stock may utilize the put protection to limit losses 
over a short-term horizon. Second, the buyer of common stock who wants some 
"insurance" in case he is wrong may also find the put protection attractive.