Short Synthetic
Components
Short one call option and long one put option at the same strike price.
Risk / Reward
Maximum Loss:Unlimited.
Maximum Gain: Unlimited.
Characteristics
When to use: When you are bearish on market direction.
A Short Synthetic is just the reverse of the Long Synthetic i.e. this option combination behaves exactly the same way as being short the underlying security. So, if you are very bearish on an asset and want the same characteristics as if you were short the asset then you might want to consider using a Short Synthetic.
Comments page 1 of 1
There are 3 risks in this position beyond the move in the underlying stock: dividend risk, interest rate risk, and pin risk. If this position is put on with a prime broker, in addition you have margin risk.
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