Identifier: C5T4L2 · Revision: 2026-10-26 · Classification: domestic

Decision and objectives

The practical task is to compare ownership, wrappers and derivative protection on one risk objective. Make the decision reproducible: name the exposure, time horizon, cash requirement and comparison baseline before selecting a product.

Objectives: Compare ownership, wrappers and derivative protection on one risk objective; Calculate expiry outcomes and distinguish interim option values; Select a feasible route after costs and funding constraints.

Prerequisite: C5T4L1; completed Classes 1–4 and the Stock Market School foundation or Forex School foundation. Every example is hypothetical. Prices, dates, rates, fees, contract factors, policies and tax schedules are supplied teaching inputs, not current offers or legal parameters. No live account is needed.

Mechanics

Direct shares provide ownership, a fund provides units in a managed pool, a future provides a linear obligation and a put provides a right under its exercise terms. Economic exposure can be comparable while voting, custody, counterparty, timing and cash commitment differ. A future position plus idle cash is not automatically a fund replica; distributions, tracking and funding must be reconciled.

The following option is a hypothetical European cash-settled put. It is exercisable only at expiry and its cash receipt offsets, rather than automatically sells, the separately owned shares. Verify actual domestic option availability and depth before implementation; the constructed contract is not a current listing claim.

Price and return drivers

Protected expiry wealth = share quantity × expiry price + put quantity × multiplier × max(strike − expiry price, 0), less paid premium and costs in the net result. Pre-expiry value also depends on volatility, time, dividends and executable prices, so a bounded expiry result is not a guaranteed early-sale value.

Worked case

Hypothetical 1,000 shares at TRY 100, exposure TRY 100,000. Route A direct shares cost TRY 400 total execution; at expiry prices 90, 100 and 110 its net profits are −TRY 10,400, −TRY 400 and +TRY 9,600. Route B fund has supplied published unit changes −10.5%, −0.5%, +9.5%, already after internal expenses; TRY 100 investor exit charge gives −TRY 10,600, −TRY 600 and +TRY 9,400. Route C equivalent long future gives linear gross −10,000, zero, +10,000, less supplied execution TRY 300 and collateral funding TRY 1,000: −TRY 11,300, −TRY 1,300, +TRY 8,700. Margin is TRY 20,000 teaching input, with no return assumed on unused cash.

Adverse case

Route D owns the shares and ten long puts with multiplier 100, strike 95, premium TRY 3/share, expiry matching the objective and total execution TRY 500. Initial economic cost TRY 103,500. At expiry 90: shares TRY 90,000 plus put TRY 5,000 yield −TRY 8,500; at 100: −TRY 3,500; at 110: +TRY 6,500. A supplied pre-expiry state spot 97 and put bid 4.20 gives package value TRY 101,200 before any new charges, −TRY 2,300 against initial cost. That quote is a supplied scenario, not derivable from expiry payoff alone. Futures can also require cash losses before expiry; the put's premium is paid up front.

Practical use

Compare actual permitted routes for identical quantity and horizon, including corporate actions, distributions, fund expense boundaries, principal or margin cash, custody and tax. Confirm option exercise and settlement terms and whether both legs can be executed. Add reserve opportunity cost where material; it is excluded from the option/share cases above to isolate supplied protection costs, while the future funding line is expressly included.

Use permitted domestic access routes and the actual instrument documents. Verify intermediary authority, investor eligibility, order/redemption terms, settlement, custody and executable size before implementation. Reconcile spread and commissions, funding, collateral, custody, product expenses, conversion and exit charges; an amount already embedded in a fill or fund unit price is not deducted again. A published mark or product description does not promise an executable price or liquidity.

Tax is excluded unless a numerical schedule is expressly supplied as hypothetical. For actual rules record income year, residence and individual/corporate status, instrument and acquisition/contract dates, taxable event and rule effective date. The GIB investment-income guide, checked 2026-10-26, covers 2025 individual income; its 2026 publication date alone cannot settle a 2026 liability.

Decision boundaries

If the objective is an expiry loss no larger than TRY 9,000 and there is enough initial cash, route D satisfies this supplied three-state comparison while retaining upside less premium. It does not eliminate issuer, counterparty or early-exit risk. A cheaper linear future fails that particular downside boundary. Decline all routes if the objective cannot be funded or relevant contract availability is unverified.

Practice and references

Exercise: hypothetical 500 shares at 80 plus matched European cash-settled puts, strike 75, premium 2, all fees TRY 200. Solution: initial cost TRY 41,200. At expiry prices 60, 80, 90, package profits are −TRY 3,700, −TRY 1,200 and +TRY 3,800. These expiry outcomes do not establish current put bids.

Takeaway: Select a feasible route after costs and funding constraints with the cash dates, costs and remaining risks stated.

Product card: portfolio-decision-record. Formula: Matched protective-put package expiry result. Glossary: Protection objective, Payoff boundary. Next lesson: C5T4L3. Topic test.

Sources checked 2026-10-26:

Additional product cards: mutual-fund, viop-index-future, protective-put.

Shared reference guide