Short Synthetic future

Short Synthetic is a strategy to be used when the investor is bearish on the market direction and expects market to fall down in the near term.

This strategy involves Selling a Call Option and Buying a Put Option at the same Strike price. Both Options must have the same underlying security and expiration month.

Short Synthetic behaves exactly the same as being short on the underlying security.

The investor can go for Short Synthetic strategy expecting payoff characteristics similar to being short on the stock or future contract.

The risk and the reward are unlimited.

Investor View: Bearish on direction of the Stock / Index.

Risk: Unlimited.

Reward: Unlimited.

Breakeven: Strike Price +/- net premium paid/ received.

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