Synthetic Long Call
Description
Holding the underlying and buying a put at the same strike, replicating the payoff of a long call using stock and a put instead of a call.
Setup
- Hold (or buy) one unit of the underlying.
- Buy one put at the same strike as the call being replicated.
Context
Used to convert an existing stock holding into a call-like payoff, for example to hedge downside while a suitable call is illiquid or mispriced.
Risk Profile
Maximum loss is the entry price minus the strike, plus the premium paid for the put -- the same shape as a protective put at the same strike. Gain is unlimited as the underlying rises.
Pros
- Turns an existing holding into a defined-risk position.
- Keeps unlimited upside participation.
- Useful when the desired call is hard to trade directly.
Cons
- Requires holding the full underlying position, tying up more capital than buying a call outright.
- Put premium is a recurring cost if renewed over time.
Effect of Time
Time decay works against the long put, quietly eroding the cost of the position each day.
Effect of Volatility
Rising implied volatility increases the cost of the put but also increases its value as a hedge.
Look-Alike Strategies
Live Structure
| Position | Right | Ratio | Strike | Expiry | Premium | Fill Price | Est. Fee |
|---|---|---|---|---|---|---|---|
| Long | Underlying | 1 | — | — | $84403.6700 | $84403.6700 | $0.0000 |
| Long | Put | 1 | $84500.0000 | 24 Sep 2026 | $299.6330 | $329.1743 | $25.3211 |
Estimated Cost to Assemble
An estimate of what entering this structure right now would really cost: filling every leg by crossing the spread (the ask when buying, the bid when selling) instead of at the mid-price, plus an estimated exchange fee. Real fees and fills can differ from this estimate.
Payoff & Greeks vs. Underlying Price
The Greeks curves are a Black-Scholes model using each leg's current implied volatility, holding time to expiry fixed -- not live exchange data at every price, which only exists at the current price (dashed line).
Payoff at Expiration
This structure's value and profit/loss at expiration, at a handful of specific prices: every leg's strike, every breakeven, the current spot, and the chart's own range.
| Underlying Price | Value at Expiration | Profit / Loss | Return on Cost |
|---|---|---|---|
| $67600.0000 | $84500.0000 | -$203.3030 | -0.2% |
| $84403.6700 current | $84500.0000 | -$203.3030 | -0.2% |
| $84703.3030 breakeven | $84703.3030 | $0.0000 | +0.0% |
| $101400.0000 | $101400.0000 | $16696.6970 | +19.7% |