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Synthetic long stock |
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Synthetic long stockA long call position combined with a short put of the same series.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 stockSynthetic stockAn option strategy that is equivalent to the underlying stock. A long call and a short put is synthetic long stock. A long put and a short call is sythetic short stock. Synthetic putSynthetic putA strategy equivalent in risk to purchasing a put option where an investor sells stock short and buys a call. Synthetic long putSynthetic long putA short stock position combined with a long call of the same series as that put. 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. Further SuggestionsSynthetic forward positionsynthetic long call |
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