May 2012
Beginner
793 pages
20h 29m
English
A synthetic position is any financial instrument that is artificially created by using a combination of other assets whose features, as a whole, are comparable to the instrument that it is designed to replicate. For example, a trader can mimic the payout of a call option by simultaneously going long a futures contract and buying a put option. Likewise, the payout of a put option can be duplicated by selling a futures contract and buying a call option.
Synthetic options allow traders to easily adjust their trade should the market go against their original assessment. This makes perfect sense. If you are long a put option and long a futures contract in a falling ...
Read now
Unlock full access