Synthetic Long Put
Description
Shorting the underlying and buying a call at the same strike, replicating the payoff of a long put using a short stock position and a call instead of a put.
Setup
- Sell (short) one unit of the underlying.
- Buy one call at the same strike as the put being replicated.
Context
Used to convert an existing short position into a put-like payoff, capping the otherwise uncapped risk of the short with a long call.
Risk Profile
Maximum loss is the strike minus the entry price, plus the premium paid for the call -- the same shape as a protective call at the same strike. Gain is large but finite, bounded by the underlying reaching zero.
Pros
- Caps the uncapped risk of a bare short position.
- Useful when the desired put is hard to trade directly.
Cons
- Requires holding the full short position, tying up more margin than buying a put outright.
- Call premium is a recurring cost if renewed over time.
Effect of Time
Time decay works against the long call, quietly eroding the cost of the position each day.
Effect of Volatility
Rising implied volatility increases the cost of the call but also increases its value as a hedge.
Look-Alike Strategies
Live Structure
| Position | Right | Ratio | Strike | Expiry | Premium | Fill Price | Est. Fee |
|---|---|---|---|---|---|---|---|
| Short | Underlying | 1 | — | — | $84392.1300 | $84392.1300 | $0.0000 |
| Long | Call | 1 | $84500.0000 | 24 Sep 2026 | $206.7607 | $227.8588 | $25.3176 |
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 | -$67600.0000 | $16585.3693 | +19.7% |
| $84185.3693 breakeven | -$84185.3693 | $0.0000 | +0.0% |
| $84392.1300 current | -$84392.1300 | -$206.7607 | -0.2% |
| $84500.0000 | -$84500.0000 | -$314.6307 | -0.4% |
| $101400.0000 | -$84500.0000 | -$314.6307 | -0.4% |