You own 100 shares of TSLA bought at $420, and you buy one put as insurance. The scale never moves, so you can watch the shape. Grab the blue dot: left and right changes the stock price, up and down changes implied volatility. Drag the strike line to move your insurance floor. Lock any variable to hold it still and isolate one effect.
Combined profit / loss per share at expiration
Protected (shares + put) Shares alone Your floor Upside breakeven
Put premium
$0
cost of insurance
Worst-case value
$0
your floor per share
Upside breakeven
$0
stock at expiration
Protection cost
0%
premium / share price
Plain English
Three things to know about a protective put:
It is insurance you pay for. Generally you give up a small, known premium up front, and in return your loss below the strike is capped no matter how far the stock falls.
Your floor sits below the strike by the premium. As a rough guide, not a promise, your worst-case value per share is the strike minus what you paid and minus your entry, so a higher strike costs more but protects sooner.
The upside is yours minus the premium. In practice you still keep the gains if the stock climbs, just shifted down by the insurance cost, so you only need a modest move to get back to breakeven.
Taxes are not shown here. Options and the underlying stock are taxed differently, and it depends on your holding period and account type. None of this is tax advice.