A married put is among the common option strategies used by investors to hedge their long stock positions against possible decline risk, and it is an insurance product. The strategy is executed by buying a put option and an equal quantity of the underlying stock shares.

The call option purchased gives the investor the right, but not the obligation, to purchase underlying stock at some agreed upon strike price on or before an expiration date. The overall approach offers a minimum price guarantee on a stock held by an investor, limiting losses in the event the stock falls, with potential price appreciation retained.

The concept of married put is also referred to generally as buying an insurance on a share. Like an insurance defends against a certain future probable loss, a put option defends against a huge plunge in the price of the shares. If the stock price is below the strike price of the put, then the investor can exercise the option and sell the stock at the strike price and prevent losses. Worst case, the investor will lose the difference between the cost price to purchase the stock in the first instance and the put option strike price plus the put premium.

For example, if the investor owns 100 shares purchased at $50 each and buys a put contract whose strike is $45, the investor has actually hedged against loss more than $45 per share (put premium price excluded). When the stock drops to $40, the investor will sell the stock at $45 by exercising the put option in order to reduce the loss. The married put is employed most frequently by long-term investors with a large stake in a stock or other asset and who want to hedge the investment against short-term price fluctuations or unexpected market events that can reduce the price of the asset in a negative manner.

Perhaps the most significant advantage of the married put is that it has a defined and recognizable risk/reward profile. The maximum possible loss is limited to the difference between the cost price of the stock and the put strike price minus the cost of the put option premium. The strategy is extremely appealing to risk-averse investors who want to limit exposure to risk but still hold ownership of the asset. The married put is particularly useful in times of market uncertainty or higher volatility as it insulates the investor from sudden dips in stock. Other than protecting against loss, the married put does not stop the investor from keeping the stock and enjoying potential profits.

In a stock price rise, the investor would never be deterred from exercising the put option and is able to sell the stock at the higher price and reap the whole potential profit. The investor will only lose the put premium if the stock price goes up or continues to stay higher than the put strike price, where the put option will be worthless. But this premium is a small cost to bear for the security of the downside protection.

For example, if the stock price increases to $60, then the investor can sell the stock at the higher market price, whereas the put purchased expires worthless. In this case, the investor has still profited from the rise in the stock price, except for the cost of the put option. Married put strategy is also used for hedging profit on a stocks' appreciated position.

For instance, if the investor has an appreciated stock and he does not wish to allow the pullback, then he can purchase a put option in order to be able to hedge the already attained profit. By doing so, they are able to hold the stock and earn future price appreciation and still have a fall-back position in the event of a market reversal. This renders the married put an extremely useful instrument for investors who would like to hedge gains without having to sell the underlying security.

The second most significant feature of the married put strategy is its flexibility. The protection can also be tailored to the investor's risk appetite by choosing the right put option strike price and the expiry date. A lower strike price will provide higher protection in case of a fall but will cost more for the premium, while an increase in the strike price will provide lower protection but reduce the cost of the premium. Moreover, one can choose a short-dated or long-dated option depending on whether they want to hold the position for a shorter or longer period of time.

Long-dated puts are more expensive but provide protection for a longer period of time, while short-dated puts are cheaper but could require more active portfolio management and more frequent rebalancing. The married put is a great choice for conservative investors who want to hedge short-term market volatility without necessarily having to sacrifice their belongings. An Option Income Strategy is a way of producing continuous income by utilizing option contracts. Options are usually sold by speculators for the purpose of receiving premiums, benefiting from options' time decay. The strategies allow investors to receive income on their holding or portfolio with smaller amounts of money initially invested compared to owning the underlying shares outright.