How Does a Synthetic Long or Short Position Relate to the Components of a Box Spread?

A box spread is constructed from two synthetic positions. The lower strike legs (long call/short put) create a synthetic long asset position.

The higher strike legs (short call/long put) create a synthetic short asset position. The net result is that the market risk of the underlying asset is completely neutralized, leaving only the fixed interest rate component.

The box spread is therefore a zero-risk way to borrow or lend money for the duration of the option contract.