In Options Trading, What Is a “Synthetic Future” and How Does It Relate to Hedging?

A synthetic future is a position created by simultaneously buying a call option and selling a put option with the same strike price and expiration date, or vice versa. Specifically, a long synthetic future is Long Call + Short Put.

This combination mimics the payoff profile of a standard long futures contract. It is a tool for hedging or speculation, offering an alternative way to take a directional position on the underlying asset's price movement without trading the actual future.