In a Synthetic Long Position, What Is the Role of the Options’ Premium Paid and Received?

The premiums paid and received determine the initial cash flow and the break-even point of the synthetic long position. The position is Long Call (premium paid) and Short Put (premium received).

The net premium paid or received adjusts the break-even point of the synthetic future away from the strike price. The initial cash flow must be factored into the total profit or loss calculation at expiration.