How Do Commissions and Fees Impact the Viability of Synthetic Positions?

Commissions and fees can significantly impact the viability of synthetic positions, especially those involving multiple legs, like options spreads or synthetic stock. Each transaction ▴ buying or selling a stock, or an option ▴ incurs a commission.

For a synthetic short stock (long put + short call), this means at least two transaction costs to open the position and two to close it. These costs eat directly into the potential profit or add to the loss.

For strategies with small profit margins, high commission costs can turn a theoretically profitable trade into a losing one.