™A protective put may limit part of a stock holding's downside during its term, but its premium, strike, quantity and expiration determine the actual protection.
Risk & Portfolio
Hedge
A position intended to offset some risk in another holding; hedges have costs and may be imperfect.
Plain-English context
Put the definition to work.
A hedge introduces its own cost, basis risk and possible funding need; protection is limited by contract, quantity and horizon.
Further reading and verification. Examples are hypothetical, not current quotes or recommendations. Product terms, tax treatment and market rules can change. Investor.gov — asset allocation and diversification