Suppose the options have a bid-ask spread. What term best describes the position you have created?Ĭ. What can you say about the strike price?ī. Suppose, to be concrete, that the premium on the call you buy is the same as the premium on the put you sell, and both have the same strikes and times to expiration.Ī. Provided the premiums on the options are the same, they cancel each other out so the transaction fees are a wash. The end result is that the synthetic stock has the same value, in terms of capital gain potential, as the underlying stock itself. One strategy investors are applying to the XYZ options is using "synthetic stock." A synthetic stock is created when an investor simultaneously purchases a call option and sells a put option on the same stock. Unlike these options, options on futures.Here is a quote from an investment Web site about an investment strategy using options:
Chapter 11: How to Prepare a Risk Profile TL: The Risk Map is a graphic representation of a Risk Profile and in this case contains eight risks (page 173). (100 Questions Answers About Osteoporosis and Osteopenia) It's also important to know that there is risk to fracturing your bones whether you are diagnosed with osteoporosis or not (meaning you may have it but don't.