Married Put

When one put loves another one very, very much...

First off, a few basic terms. Being "long" in the financial markets means a bet that the value of the asset involved will go up. You buy shares in AMZN, hoping you'll be able to sell them for more money down the road; in that situation, you are said to be "long AMZN."

The opposite situation is called a "short." It's a bet the price of an asset will go down.

All right, on to another set of terms:

Options give holders the right, but not the obligation, to buy or sell some underlying asset at a fixed price during a pre-set period of time. A put represents a type of option...specifically, one betting that the underlying asset will go down.

The term "married put" refers to a strategy where an investor holds both the underlying asset (meaning they are "long" the asset), while simultaneously holding a put (a "short" bet) for the same asset.

So...you buy those share of AMZN. Meanwhile, you also acquire a put for AMZN, with an at-the-money strike price. You buy the shares at $1,900 and simultaneously acquire a put with a $1,900 strike price.

The goal is to take advantage of the upside of the stock, while having protection if the stock goes down. If AMZN shares fall, your put will pay off. However, if it rises, you make money off the higher stock price. Your only offsetting loss would be the cost of the put (which would expire unused in the case where the AMZN shares rise).