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Chuck Hughes: Maximum Risk 5.9% with Unlimited Upside

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Uploaded on Aug 31, 2011

One of my favorite strategies during volatile markets is the married put trade which is initiated by purchasing stock and a protective put option. My brokerage account confirmation shows that I purchased 800 shares of the Nasdaq ETF symbol QQQ at 54.35 and purchased 8 of the QQQ Jan 12 55-Strike put options at 4.11.

The 55-Strike put option protects the QQQ purchase and the value of the QQQ will not decline below 55.00 regardless of the subsequent price movement of the QQQ.

In this video we will learn that my maximum risk for this trade is $346 or 5.9% but the upside potential is not limited. A maximum risk of 5.9% is a great trading approach in today's volatile markets.

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