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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
The minimum guaranteed sale price when protected by a put option.
Why It Matters
A floor price gives you certainty in uncertain markets. If you own stock at $100 and buy a $90 put, your floor is $90 minus the premium. No matter if the stock crashes to $50 or $20, you can always sell at $90. This guaranteed exit price lets you hold through volatility with confidence.
Key Points
- Floor = Put Strike Price - Premium Paid (e.g., $90 strike - $3 premium = $87 floor)
- Higher strike puts provide higher floors but cost more
- Floor protection has a time limit - puts expire
Learn More
Protective Puts
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Related Terms
Common Questions
The minimum guaranteed sale price when protected by a put option. A floor price gives you certainty in uncertain markets. If you own stock at $100 and buy a $90 put, your floor is $90 minus the premium.
A floor price gives you certainty in uncertain markets. If you own stock at $100 and buy a $90 put, your floor is $90 minus the premium. No matter if the stock crashes to $50 or $20, you can always sell at $90. This guaranteed exit price lets you hold through volatility with confidence.
Floor = Put Strike Price - Premium Paid (e.g., $90 strike - $3 premium = $87 floor)
Higher strike puts provide higher floors but cost more
Floor protection has a time limit - puts expire