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Hedging a Long Spot Position with a Long Put

              Long Spot Position    Long Put     Combined

Declining practically prices: unlimited exercise limited loss lost

Increasing unlimited expire unlimited Prices profit or sell profit

The hedger:- has obtained a protection against decreasing prices.- still has the possibility of profitting from increasing prices.

N.B. "Practically" unlimited is to say here that the maximum loss is the price paid for the underlying asset.