How Do Options Contracts Function as a Form of Synthetic Asset? ⎊ Path

How Do Options Contracts Function as a Form of Synthetic Asset?

Options can be combined to synthetically replicate the payoff of other financial instruments, including the underlying asset itself. For example, buying a call and selling a put at the same strike price can create a synthetic long position in the underlying asset.

This allows traders to gain exposure without holding the asset, thus acting as a synthetic derivative.

How Can a Trader Use a Long Put Option to Replicate the Payoff of a Short Stock Position?

What Is a ‘Synthetic Asset’ in the Context of Financial Derivatives?

Does Implied Volatility Affect Call and Put Options Differently?

In a Financial Derivative Context, What Is a ‘Synthetic Short Position’?

What Is the Concept of a ‘Synthetic’ Long or Short Position?

What Is a “Synthetic Long” Position Created Using Delta and the Underlying?

Can a Perpetual Swap Be Used to Create an Options-like Payoff Structure?

Can Decentralized Finance (DeFi) Protocols Replicate the Systemic Risk Reduction Benefits of a Traditional CCP?