Protective Put Calculator

A protective put combines shares you own with a bought put on the same shares. A put gives you the right to sell at its strike price, subject to the contract terms. This calculator estimates the premium cost, strike-based protection and expiry breakeven for a fully matched position. Its main loss and breakeven cards use Current Stock/Index Price, even when Your Purchase Price differs. Read those cards as a comparison from today's value. Use the purchase-cost calculation below to check your overall gain or loss.

The price basis changes the meaning of your loss

There are separate questions when you already own the shares: how much could the position lose from its current value, and what would the whole investment earn or lose from your original purchase? A hedge bought after a rise can protect an existing gain while still allowing a fall from today's value. Keep those comparisons separate.

The tool's printed formula refers to purchase price, but its main calculations add the put premium to the current price. Changing Your Purchase Price can change descriptive strategy labels without changing Maximum Loss or Breakeven Price. The label Effective Cost Basis therefore means current price plus premium here. It is unsuitable as an accounting or tax cost basis. If the strike exceeds the chosen starting price plus premium, the matched expiry payoff already exceeds that cost at its floor. In that case, the reported breakeven is not a price where the position earns nothing.

For a matched position, the expiry profit per share is the final share price, plus any put payoff, minus the chosen starting price and premium. Below the strike, the put payoff offsets further falls in the share price. Above the strike, the put has no expiry payoff. This is expiry arithmetic; selling the option earlier needs its actual resale price.

Protective put formulas: maximum loss, breakeven and floor

A protective put is long shares plus a long put on the same shares. The put sets a floor under the position. The formulas below are per share, before charges, and measured at expiry. Replace the starting price with the figure that matches the question you are asking, because the calculator's cards use the current price while your own records use your purchase price.

• Maximum loss = (starting price - strike) + premium. This holds for any final price at or below the strike.
• Breakeven at expiry = starting price + premium. The shares must end above this level before the position is ahead.
• Floor value of the position = strike - premium per share. Whatever the share does below the strike, the combined value does not fall below this number, before charges.
• Upside is open. Above the strike the put expires worthless, so the position gains as the shares rise, minus the premium.

Take a made-up example. A share starts at ₹500, you buy a put with a strike of ₹480 for a premium of ₹12, and you hold 200 shares. Maximum loss per share is 500 - 480 + 12 = ₹32, so ₹6,400 for 200 shares. Breakeven is 500 + 12 = ₹512. The floor value is 480 - 12 = ₹468 per share, or ₹93,600 for 200 shares. If the share falls to ₹300, the position is still worth the floor value, not 200 times ₹300.

That last point answers a common question: what is a protective put position worth if the stock falls below the strike? The put gains one rupee for every rupee the share falls below the strike, so the two cancel below it. The premium is the amount you gave up for that safety.

Enter prices per unit and quantity as underlying units

• Current Stock/Index Price: the reference price for the calculator's main risk cards. Type it yourself; the form does not fetch a quote.
• Your Purchase Price: your historical average purchase price. Retain it for your records, but do not expect it to drive the headline loss calculation.
• Put Strike Price: the contract's strike, which sets the expiry payoff threshold.
• Put Premium: the amount paid per underlying unit, rather than the entire option contract's cost.
• Days to Expiry: the time left until the option expires. Changing it does not calculate or fetch a premium, and the results do not show the protection cost as a yearly rate.
• Quantity to Hedge: the share or underlying-unit count assumed to be fully covered. Entering a lot count as this quantity would understate the premium and loss amounts.

The page has no option-contract selector or separate field for how many puts were bought. It assumes all entered underlying units receive matching protection. It cannot check that your actual option quantity covers your shares. Confirm the deliverable and expiry of the contract independently. An index put on a collection of unrelated shares also leaves a mismatch that this simple form does not measure.

Worked example: a fully matched hypothetical hedge

Every price and quantity in this example is made up. Assume Current Stock/Index Price and Your Purchase Price are both ₹1,000, Put Strike Price is ₹950, Put Premium is ₹20, Days to Expiry is 30 days and Quantity to Hedge is 100 units. This is a mathematical matched-quantity example, not a quoted Indian stock contract or a statement of its lot size.

• Cost of Protection: ₹20 × 100 = ₹2,000.
• Effective Cost Basis and Breakeven Price: ₹1,000 + ₹20 = ₹1,020 per unit.
• Maximum Loss from the entered current price: (₹1,000 + ₹20 − ₹950) × 100 = ₹7,000.
• Protected Below: ₹950, the entered strike.
• Protection Level %: (₹1,000 − ₹950) ÷ ₹1,000 × 100 = 5%. This is the distance down to the strike, not the proportion of losses refunded.

Suppose the example stock finishes at ₹900. The stock loses ₹10,000, the put pays ₹5,000 at expiry, and its premium cost is ₹2,000. The combined result is a ₹7,000 loss before charges. A lower expiry price gives the same matched-position loss under these assumptions.

Now suppose only Your Purchase Price changes to an illustrative ₹900. The calculator's main cards remain based on ₹1,000. Against the original cost, the strike-floor result is (₹950 − ₹900 − ₹20) × 100 = ₹3,000 profit before charges. That existing gain and the ₹7,000 downside from today's value can both be true.

Which output cards need extra care?

Cost of Protection scales the entered premium by the entered quantity. Protected Below repeats the strike. Neither establishes whether you have bought the necessary option contracts. Keep the risk-reward calculator separate from this coverage check: a favourable ratio alone does not prove that a hedge is matched.

Upside Potential uses an assumed higher future price because this form has no target-price input. It is a preset scenario, not an expected return. Strategy Type and Best For are descriptive labels selected by the calculation; they cannot judge your financial situation or recommend a hedge.

Hedge Ratio % does not compare your entered shares with your actual portfolio because there is no portfolio-value field in this form. Its default calculation treats the entered position as the portfolio. Do not read it as proof of complete portfolio protection.

Some fields replace blank or zero entries with built-in assumptions. A zero-premium test therefore does not reliably represent a free put. Use positive, internally consistent inputs, check the premium multiplication yourself and reject results for impossible contracts or mismatched quantities.

Choosing the strike and expiry

Two choices decide how much a protective put costs and how much it protects: how close the strike is to the current price, and how long the put lasts.

A longer expiry costs more in total, but it spreads that cost across more days. A shorter put costs less now, but you may need to buy again, and every purchase carries a new premium. Whichever you pick, the calculator takes the premium you type. It cannot tell you whether the price is fair. The implied volatility calculator shows how much volatility an option price implies.

Whether a protective put is worth the cost depends on what you want it to do. It reduces the loss on a fall and costs money when the shares stay flat or rise. If you hold a position you do not wish to sell and you worry about a specific event, such as results, some traders use it. If you would rather sell the shares, the hedge adds cost without a purpose. Nothing here is a call to buy or hold anything.

What the premium buys, and what it leaves out

The put premium is paid for temporary protection and reduces the combined position's result. It can be lost even when the share position rises. The protection ends with the option's life; continued protection would require another transaction with its own cost. A protective put does not freeze the value of your entire account.

The Options Industry Council explains the same-stock combination and the strike-based floor. Its material describes options cleared by the US Options Clearing Corporation. It does not establish the settlement process, contract quantity or exercise timetable for an Indian contract. Check the exchange specifications and broker instructions before carrying any position into expiry.

This calculator excludes brokerage, statutory charges, dividends, financing and income tax. It also lacks the inputs needed to value a put before expiry. Use actual exit prices when reviewing a closed hedge; an expiry payoff is different from the option price you could obtain today.

For comparison, a covered call adds a sold call to owned shares and changes the upside. The implied volatility calculator addresses option-pricing assumptions. Neither replaces a check of the exact contracts and quantities in your hedge.

Protective put vs stop-loss vs collar

A protective put is one of several ways to limit a loss. Each deals with gaps, cost and upside differently.

Which one is better depends on cost, how much you value gap cover and whether you are willing to cap your upside. A stop is free but can slip. A put costs money but pays at the strike. A collar costs less but gives up the gains above the call strike, and a sold call adds an obligation. The protective put strategy page covers the idea in more detail, and the covered call comparison explains selling a call.

Protective puts on Indian stocks and Nifty

Stock options on NSE are available only for stocks in the derivatives segment, and each contract covers a fixed lot, not a single share. To hedge a share holding with a stock put, your holding needs to be at least one lot, and partial lots cannot be hedged. Lot sizes change, so check the current figure on the NSE site before you use any quantity. For example, the lot for Nifty 50 options in this site's records is 65 units, and it was last checked on 28 Oct 2026.

Liquidity differs between stocks. Many stock options trade thinly, with wide gaps between the buy and sell price, so the price you pay can be worse than the calculator shows. Index puts are more liquid, which is why some investors use a Nifty put against a diversified portfolio. That hedge is imperfect, because your shares may not move like the index. See how to hedge a stock portfolio and what a lot means in F&O.

Enter the quantity in underlying units, which is the lot size times the number of lots, as the calculator asks. Index options and most stock options are settled as set by the exchange, so read the contract page before holding to expiry.

Protective put questions

Sources

• Options Industry Council: protective-put structure and expiry payoff, checked 16 October 2026.
• NSE: individual-security derivative specifications, checked 16 October 2026.