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Synthetic

Trading Term

An option strategy that involves simultaneously buying a call and selling a put in identical numbers (or sell a call and buy a put in identical numbers), where both have the same underlying, expiration date and strike price. For example:

  • Buy a synthetic: Buy 1 April02 100 call, Sell 1 April02 100 put.
  • Sell a synthetic: Sell 1 April02 100 call, Buy 1 April02 100 put.

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