Synthetic stock
TradingDefinition
A position constructed from options that replicates owning the underlying stock: long call + short put at the same strike and expiration. Reverse synthetic: short call + long put = short stock.
Used to circumvent borrow costs (synthetic short to avoid HTB fees), sidestep margin requirements, or take a non-standard tax position. Watch out for early assignment on the short leg.
Used to circumvent borrow costs (synthetic short to avoid HTB fees), sidestep margin requirements, or take a non-standard tax position. Watch out for early assignment on the short leg.