Strategy lesson · Advanced · bullish
Synthetic Long Stock Explained
Long call + short put at the same strike mimics long stock payoff with different capital/margin profile.
How a Synthetic Long Stock is built
Buy call and sell put, typically same strike and expiration.
- Leg 1: buy call · strike template 100 · premium ~4 · 1 contract(s)
- Leg 2: sell put · strike template 100 · premium ~4 · 1 contract(s)
Risk & reward snapshot
| Market bias | bullish |
|---|---|
| Max profit | Unlimited like long stock (above the strike, accounting for net premium). |
| Max loss | Like stock to zero, offset by net credit/debit of the options. |
| Breakeven | Strike + net debit (or − net credit) depending on entry. |
Figures are conceptual for the classic structure. Your actual premiums, strikes, and fees change the numbers — confirm on the calculator.
When traders use it
- You want stock-like exposure with options mechanics (leverage/margin differs by broker).
Key risks
- Short put assignment and margin; not “limited risk” like a long call alone.
- Early exercise and pin effects near expiration.
Practical tips
- Compare capital requirement vs buying shares outright for your account type.
Practice on the calculator
- Open the Synthetic Long Stock calculator.
- Load a symbol and option chain; fill realistic mid premiums.
- Review max profit, max loss, breakevens, and the date × price heatmap.
- Change strikes and DTE to see how risk shape shifts.
FAQ
What is a Synthetic Long Stock?
Long call + short put at the same strike mimics long stock payoff with different capital/margin profile.
What is the max loss on a Synthetic Long Stock?
Like stock to zero, offset by net credit/debit of the options.
When should I use a Synthetic Long Stock?
You want stock-like exposure with options mechanics (leverage/margin differs by broker).