What is a Protective Call?

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Accepted Answer

A Protective Call is an options strategy wherein a trade is short (or sells short) 100 shares and buys one at the money or out of the money Call contract. The purpose of buying the call contract is to offset upward movement on the shares the trader shorted. As the stock gains money, the trader loses money on their short, but gains money on their Call, thus offsetting losses incurred on the shares.