Synthetic put combination is to effectively create a synthetic put position that has almost the same risk-reward attributes as a straightforward put position, but with added advantages such as flexibility and liquidity. Synthetic puts are often used by institutional investors to disguise their trading bias (bullish or bearish) on a specific security.
DescriptionBy combining a long call option and a short stock position, the investor simulates a long put position. A synthetic long put is often established as an adjustment to what was originally simply a short stock position.There is one possible advantage over a long A synthetic short put is created when long stock position is combined with a short call of the same series.
It is so named because the established position has the same profit potential a short put. Synthetic Short Put ConstructionLong 100 SharesSell 1 ATM CallThe covered call is a popular example ofa synthetic short put. It is entered by selling at-the-money calls and buying an equal number of at-the-moneyputs of the same underlying stock and expiration date. Synthetic Short Stock ConstructionBuy 1 ATM PutSell 1 ATM CallThis is an unlimited profit, unlimited risk options trading strategy that is taken whenthe options trader is bearish on the underlying security but seeks an alternativeto short selling the stock.
Trade options FREE For Days when you Synthetic short put option strategy pdf a New OptionsHouse Account Unlimited Profit PotentialSimilar to a short stock position, there is no maximum profit for the syntheticshort stock. This book or any part thereof should not be copied, reproduced, duplicated, sold, resold or exploited for any commercial purposes. Furthermore, the book in its entirety or any part cannot be stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise.
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