long synthetic call

[blancspa]

long synthetic call
what`s that? where can I do it? why? and anything else

 

[Martinghoul]

My 2c...

You can end up being long calls synthetically through put-call parity (if you're long puts and long the underlying, what do you get? You can draw the payoff diagrams yourself). I don't see any reason to specifically put on a trade like that.

 

[TheBramble]

To create a Synthetic Long you buy the Call and sell the Put at the same strike creating a synthetic long stock position.

As Martin says, you wouldn’t normally choose this simply to replicate holding the stock, but you'd utlise it if you were in a complex position and needed the equivalent such as for a hedge or if sufficient quantity of physical stock were unavailable (a situation that has rarely been a problem in reality or in the virtual world of naked short selling...).

The synthetic long has almost the same P&L potential as owning the stock outright. The Cons of a synthetic long is the premium you pay on the purchased Call and the loss of dividends on the stock ownership. The Pros of the synthetic long are the income of the premium on the sold Put, the lower overall investment required to control a much larger amount of stock and therefore, the interest opportunity on those funds not employed in the position.

 

[blancspa]

To create a Synthetic Long you buy the Call and sell the Put at the same strike creating a synthetic long stock position.

As Martin says, you wouldn’t normally choose this simply to replicate holding the stock, but you'd utlise it if you were in a complex position and needed the equivalent such as for a hedge or if sufficient quantity of physical stock were unavailable (a situation that has rarely been a problem in reality or in the virtual world of naked short selling...).

The synthetic long has almost the same P&L potential as owning the stock outright. The Cons of a synthetic long is the premium you pay on the purchased Call and the loss of dividends on the stock ownership. The Pros of the synthetic long are the income of the premium on the sold Put, the lower overall investment required to control a much larger amount of stock and therefore, the interest opportunity on those funds not employed in the position.

I asked about long synthetic call not synthetic long, but I have actually meant the other one

 

[blancspa]

My 2c...

You can end up being long calls synthetically through put-call parity (if you're long puts and long the underlying, what do you get? You can draw the payoff diagrams yourself). I don't see any reason to specifically put on a trade like that.

I ve heard that if you buy put at the money you can hedge your long position, let`s say in CFD`s?

 

[arabianights]

well work it out, A + B = C => B = C - A

 

[TheBramble]

Yes you did.

But Put. Buy Stock. And DYOR.

 

[rathcoole_exile]

I asked about long synthetic call not synthetic long

thats like asking for a "juice made from oranges", not "an orange juice"

 

[blancspa]

ok ok , so is synthetic long a good strategy? and where do I sell options then?

 

[rathcoole_exile]

to be honest Blancs, just forget it.

it's too complex to teach yourself via Q&A on a forum, and if you don't already know it, it's best left alone.

just concentrate on the the good stuff you've been learning and putting into practice......the grass isn't ANY greener over the Options side of the wall ....

 

[Martinghoul]

I do not know anything about CFDs. As I mentioned, I have never consciously gotten myself into any synthetic positions, but there have been times when I ended up with them. There are considerations to be taken into account with the exchange margins and the resulting cost of carry, but I don't play those games as it's not worth the trouble, in my personal opinion.