The Synthetic Option Positions: The Easier Way to Do a Buy-Write

A buy-write trading strategy, also commonly referred to as a covered-call, entails buying stock and then selling a call against it. Due to the fact that the short option position is covered by the stock, the risk of selling the option is neutralized.  However, instead of going through the two-part step of buying stock and selling a call, one can just sell the opposing put, making the buy-write the synthetic put. Details explained in the video below.

All options up and down the board have synthetic positions and understanding how to turn a call into a put and a put into a call can assist traders in turning positions around.

Leave a Reply

Your email address will not be published. Required fields are marked *