What is a key benefit of buying puts for a client with a long position in blue-chip stocks?

Buying puts for a client with a long position in blue-chip stocks serves as a protective strategy against potential losses. When an investor holds a long position, they benefit from price increases in the underlying asset. However, if the market turns and the stock price declines, the investor could face significant losses. Purchasing put options grants the investor the right to sell their shares at a predetermined price, known as the strike price, regardless of how low the market price may fall.

This hedging mechanism effectively limits potential losses by ensuring the investor can sell the shares at this agreed-upon price, thus providing a safety net during market downturns. Therefore, the primary advantage of buying puts in this scenario is that it helps mitigate the risk of price declines in the blue-chip stocks held, aligning with the objective of protecting the investment portfolio from adverse market movements.