Synthetic position - A hedging strategy combining futures and futures options for price protection and increased profit potential. For example, by buying a put option and selling (writing) a call option, a trader can construct a position that is similar to a short futures position. This position is known as a synthetic short futures position, and shows a profit if the futures prices decline, and receives margin calls if prices rise. Synthetic positions are a form of arbitrage.
Synthetic position : a hedging strategy combining futures and futures options for price protection and increased profit potential. for example, by buying a put option and selling (writing) a call option, a trader can construct a position that is similar to a short futures position. this position is known as a synthetic short futures position, and shows a profit if the futures prices decline, and receives margin calls if prices rise. synthetic positions are a form of arbitrage.
Synthetic position