Here is an option trading put strategy that is specifically designed for owners of the underlying stock used by traders wanting to learn options trading strategies to protect their assets.
George Fontanills explains this strategy in this excerpt from his book Trading Options For Dummies
Combining puts with long stock.
Purchasing puts on your existing stock investments provides insurance against significant losses when a major downturn occurs. Like other forms of insurance, it’s frustrating to write a check for something you may not need, but it’s really nice to have when the time comes. Two strategies that combine long stock with a long put are:
Married put (stock purchased together)
Protective put (stock input purchased separately)
This is not exactly an Option Trading Put Strategy for new traders, because you need to own the underlying stock.
The two positions are essentially the same, but different in the timing of purchases. Each consists of one long put for every 100 shares of stock held. There’s no need for you to distinguish between the terms. What is important for you is understanding why and how you protect your assets. I use the term protective put for the remainder of this chapter.
A put option gives you the right, but not the obligation to sell the underlying stock to contract strike price until the trading day prior to the options expiration date. You can also sell this right in the market up until this time.
Protective considerations.
The expression, “A rising tide lifts all boats” is sometimes used to describe the stock market and its tendency for all stocks to rise together during a bullish run. Unfortunately with the reverse is also true. Regardless of the merits of an individual stock, when a bear market hits, it takes no prisoners – even quality stocks decline.
Trying to anticipate swings in the market is almost impossible,
This sentence here is key to Fontanills philosophy for option trading in general, not just about this specific option trading put strategy.
so the next best thing is protecting stock earmarked for long-term. Suppose you bought stock ABC a few months ago at $34 and wish to hold it for the long term. You could lock in a sell price for that stock at any time by purchasing a put. It doesn’t matter whether it’s your intention to exercise your right or simply off-set losses with option gains.
An option trading put strategy can be put to good use to ensure the value of your assets during volatile times, so I think Options Trading for Dummies does a great job in introducing the reader to this concept.