This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. In a similar way, a synthetic option position can be created.For example, a position which is long a -strike call and short a -strike put will always result in purchasing the underlying asset for at exercise or expiration. A synthetic call is created by purchasing the underlying asset, selling a bond and purchasing a put option.
The strike price on the put option is equal to the face value of the bond, which serves as the exercise price of the synthetic call. The synthetic call will finish in the money when the price of the underlying asset is greater than the face value of the sold bond at the time of expiration. Synthetic put combination is to effectively create a synthetic put position that has almost the same risk-reward attributes as a straightforward put position, but with added advantages such as flexibility syntbetic liquidity.
Synthetic puts are often used by institutional investors to disguise their trading bias (bullish or bearish) on a specific security. The strike price may be set by reference to the spot price (market price) of strik underlying security or commodity on the day an strike price synthetic put option wikipedia is taken out, or it may be fixed at a discount or at a premium.The strike price is a key variable in a derivatives strikke between two parties.
DescriptionBy combining a long call option and a short stock position, the investor simulates a long put position. Financing is used in major decisions, decisions that may impact one throughout their whole life. Financing has many parts to it, with some parts being more applicable to people than others. In terms of trading, binary options are a huge part in trade markets. Lazada is pioneering e-commerce across some of the fastest growing countries in the world by offering a fast, secure and convenient online shopping experience with a broad product offering in categories ranging sunthetic fashion, consumer electronics to household goods, toys and sports equipment.
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Strike price synthetic put option wikipedia