Married Put — the mathematical
insurance for your stocks
Anyone holding stocks knows the feeling: a crash, a profit warning, a geopolitical event — and half of your portfolio is double-digit underwater overnight. The Married Put is a decades-old options strategy that lets you calculate your maximum loss in advance instead of just hoping.
What is a Married Put?
A Married Put consists of two positions opened at the same time:
- Long Stock — you buy the stock normally at the current price.
- Long Put — you also buy a put option on the same stock. The put gives you the right to sell the stock at the agreed strike price until expiry.
The put acts like an insurance policy: if the stock drops below the strike, you sell at the strike price — no matter how deep the market crashes. The option premium is the „insurance fee” you pay for that.
This formula holds no matter how deep the stock falls. Once the Married Put is open, your worst-case scenario is locked in — no surprises, no open losses.
Concrete real-world example
You buy 100 shares at €100.00 each — investment €10,000. You hedge at the same time with a put:
Calculation: (100 + 3) − 95 = €8 per share. Across 100 shares, that’s a maximum loss of €800 — even if the stock drops to €0. Without the Married Put, the loss could have been up to €10,000.
On the upside: if the stock rises to e.g. €130, you fully participate in the gain, minus the €3 premium per share you paid. Your upside is uncapped.
When is a Married Put worth it?
- Maximum loss is known in advance
- Upside potential remains unlimited
- Works on individual stocks, not just indices
- You keep the right to dividends
- Sleep quality during crashes is dramatically better
- Option premium reduces returns (think insurance fee)
- Put has to be rolled regularly (new expiry)
- For volatile stocks the put can be expensive
- Requires an options account and basic Greeks knowledge (Delta, Theta)
The next step: High Watermark
The High Watermark strategy is a logical evolution of the Married Put. Instead of using a static put, the strike is adjusted upward as the stock makes new highs (the „high watermark”). This way:
- You permanently lock in accumulated paper gains
- You never lose more than the difference to the last rolled strike
- You keep full upside
The strategy needs clear, rule-based triggers — when to roll, to which strike, with what expiry. Otherwise, constant rolling burns more premium than the hedge is worth.