Home > Option Strategy Finder > Synthetic Position
Synthetic Long Put
A synthetic long put is created when short stock position is combined with a long call of the same series.
| Synthetic Long Put Construction |
| Short 100 Shares Buy 1 ATM Call |
The synthetic long put is so named because the established position has the same profit potential as long put.
Unlimited Profit Potential
The formula for calculating profit is given below:
- Maximum Profit = Unlimited
- Profit Achieved When Price of Underlying < Sale Price of Underlying - Premium Paid
- Profit = Sale Price of Underlying - Price of Underlying - Premium Paid
 |
| Synthetic Long Put Payoff Diagram |
Limited Risk
The formula for calculating maximum loss is given below:
- Max Loss = Premium Paid + Commissions Paid
- Max Loss Occurs When Price of Underlying = Strike Price of Long Call
Breakeven Point(s)
The underlier price at which break-even is achieved for the synthetic long put position can be calculated using the following formula.
- Breakeven Point = Sale Price of Underlying - Premium Paid
Your new trading account is immediately funded with $5,000 of virtual money which you can use to test out your trading strategies using OptionHouse's virtual trading platform without risking hard-earned money.
Once you start trading for real, your first 100 trades will be commission-free! (Make sure you click thru the link below and quote the promo code 'FREE100' during sign-up)
Click here to open a trading account at OptionsHouse.com now!