How does being fully protected differ from being partially protected in options?

Being fully protected in the context of options typically refers to having a strategy that completely hedges against potential losses in an underlying asset. This is achieved through mechanisms such as buying a long put option, which grants the right to sell the underlying at a specific price, thereby ensuring that the investor has a safety net in case the asset's value declines significantly.

On the other hand, being partially protected means that while there are some measures in place to mitigate losses, they do not completely shield the investor from adverse movements in the market. For example, owning a lower number of puts than the number of shares or utilizing different strategies that do not cover the entire position might provide some level of risk mitigation but leave gaps where losses can still occur.

The choice that emphasizes full protection through a long call or put highlights the essential characteristic of this strategy—it fully offsets potential declines in the value of the asset, offering a complete hedge. In contrast, partial protection does not provide such a comprehensive safeguard, as suggested by its inability to prevent all losses. This fundamental differentiation underlines why the concept of full protection versus partial protection in the options market is crucial for effective risk management.