Protective Put

Buying a put option on shares you own to limit the loss if their price falls.

Example

Owning 100 shares at 100 and buying a 90 put for 2 limits the maximum loss to 1,200.

It is insurance with a recurring cost; rolled every quarter it can cost several percent of the holding a year.

Put Option — A contract giving the buyer the right, but not the obligation, to sell an asset at a set price before or on a set date.
Covered Call — Selling a call option on shares you already own, collecting the premium in exchange for capping your upside.

Appraising one position: maximum loss, break-even, cost and what you are really betting on — Before any derivatives trade, write down five numbers. If you cannot fill them in, you are not evaluating a position - you are guessing. (11 min)
For most readers, nowhere - and the exceptions are narrow — Derivatives can hedge specific risks or adjust a portfolio at a known cost, but they are not needed to invest well, and for most people the right allocation is zero. (8 min)