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Synthetic forward position |
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Synthetic forward positionA forward position constructed through borrowing in one currency, lending in another currency, and offsetting these transactions in the spot exchange market.Synthetic forward position Similar MatchesSyntheticsSyntheticsCustomized hybrid instruments created by blending an underlying price on a cash instrument with the price of a derivative instrument. It is a combination of security holdings that mimics the price movement of another single security (i.e., synthetic call: long position in a stock combined with a put on that position; a protected long sale; synthetic put: short position in a stock combined with a call on that position; a protected short sale). Synthetic long stockSynthetic long stockA long call position combined with a short put of the same series. Synthetic positionSynthetic positionA hedging strategy combining futures and futures options for price protection and increased profit potential. For example, by buying a put option and selling (writing) a call option, a trader can construct a position that is similar to a short futures position. This position is known as a synthetic short futures position, and shows a profit if the futures prices decline, and receives margin calls if prices rise. Synthetic positions are a form of arbitrage. Synthetic long putSynthetic long putA short stock position combined with a long call of the same series as that put. Synthetic long callSynthetic long callA long stock position combined with a long put of the same series as that call. Further SuggestionsSynthetic putSynthetic stock |
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