Explore Your Options by Tom Gentile
If I own shares for a growth stock that still looks to have upside potential but I am also concerned about protecting existing gains from corrective action, what can I do in regards to positioning?
If the stock has relatively liquid options listed, you have at least a couple good ones to consider. The simplest means to protect gains while still allowing for further upside in the stock is to purchase a put one-for-one against shares owned. This is called a married put strategy or long synthetic call.
Depending on which strike the trader chooses will determine how much protection is in place and how much the purchased put will eat into potential profit should the stock increase in value. The closer the chosen put is to shares, the more protection the trader has in place to guard against downside exposure.