An options strategy that is designed to replicate the pay-off of a long stock position. It is done by buying a specific amount of "at the money" calls (long call) and selling the same amount of "at the money" puts (short put) of the same underlying stock with the same expiration date. Note that the strike price of both options in a synthetic long stock must be the same. This strategy has an unlimited potential profit, while the risk is limited to the options premium.
Related information about synthetic long stock:
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What is Synthetic Long Stock? See detailed explanations and examples on how and when to use the Synthetic Long Stock options trading strategy.
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A long combination options strategy, also known as synthetic long stock, has similar risk/reward to long stock buys, but removes the up-front cost.
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Apr 18, 2012 ... But if you believe the stock is going to appreciate over the next month or two, an alternative is to open a synthetic long stock position. The May ...
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If the strike prices of the two options are the same, this strategy is a synthetic long stock. If the call has a higher strike, it is sometimes known as a collar. The term ...
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Feb 11, 2011 ... They evidently expressed this outlook by selling puts and simultaneously buying calls (otherwise known as a synthetic long stock strategy).
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You can create a synthetic long stock position simply by: ... Synthetic Long Stock: Peter bought 1 contract of Call Options and shorted 1 contract of Put Options ...