What Is a “Box Spread” and How Does It Utilize Synthetic Positions?

A box spread is a complex, four-legged options strategy involving a bull call spread and a bear put spread, both with the same two strike prices and expiration. It can also be viewed as a long synthetic future at one strike and a short synthetic future at a different strike.

The box spread is a non-directional strategy designed to lock in a profit equal to the difference between the strikes, discounted by the cost of the position, and is essentially a risk-free interest rate arbitrage.