As far as I see it, the main problem with placing stops, is that the price may rebound in the direction that you originally wanted. You might be out of the trade and have no chance of recovery.
Puts are the right to sell a security (Options for dummies. Can you explain how puts & calls work, simply?), so I could supposedly place a stop loss that will only be exercised at that exact price (avoiding being gapped over, another fallacy of stop losses) at a specific date (so if a stock rebounds, I will choose not to exercise it, and avoid another fallacy). Does this options stop loss strategy have any fallacies that I am overlooking?
Does this strategy have a name? Does it work, or are the premiums too expensive, or something else? What would be a good way to use this strategy?