What does a "protective stop" mean?
A protective stop is used to help mitigate the risk of loss in a particular investment.
For example, when you own a security, you could place an order with your broker to sell if the security falls below a certain point. In other words, you would use a protective stop to sell out the security when its price falls to a point where the expected uptrend is no longer valid.
In a short sale, a protective stop is an order to purchase the security when its price rises to a point where the expected downtrend is no longer valid.
Note: Placing a protective stop does not guarantee that your order will be filled at the "stop price." Depending on market conditions, the price your stop order is filled at may vary, either better or worse for you. Still, a protective stop can go a long way in helping you reduce overall risk.