have anyone tried protective put strategy?

the market is so difficult to beat. the solution is that we do not try to beat market at all. From my experience, the stop-loss strategy seems to do more harm than good. First of all, in many, probably most cases, stock reverses shortly after your stop loss is eaten away.those so-called resistance, support stuff are so fragile. you can not rely your hear-earned money on those crappy, shaky stuff. Secondly, stop loss does nothing to protect you from disasterour gap down (look at MTXX, BEAT).

I am thinking about protective put strategy. typically, 6 months of in-the-money put costs about 10% of purchase price (depending on volitilities etc.). However 10% premius for 6 months is too much. The strategy is that we can apply good TA skill so that there is a very good chance the stock may go up a few percent such that 6 months of in-the-money protective put costs 5% of purchase price. In other words, you buy the stock at price of X, when stock goes up to a point where max loss over 6 months (in-the-money (relative to purchase price) strike price - (purchase price + premium paid)) is 5% of initial purchase price, then lock the sell price with PUT option. In this way, you do not need to worry about what the stock can go terrible in 6 months and you won't miss any possible rally for 6 months. the max you can lose is 5% of money you paid which is very acceptable.

for example, if I buy IBKR at 15 now, its dec. 15 put is 1.4 which is about 9% of stock price. when IBKR goes up a point such that you can purchase 15 put at 0.7-0.8 range. then you can 高枕无忧 until december 19, 2009. you won't worry about ER, recession, terror strike, korean nuclear strike, earthquake, bankrupcy of citi bank, or any horrible news for a while.