Long Synthetic

Components

Buy one call option and sell one put option at the same strike price.

Risk / Reward

Maximum Loss:Unlimited.

Maximum Gain: Unlimited.

Characteristics

When to use: When you are bullish on market direction.

Long Synthetic behaves exactly the same as being long the underlying security. You can use long synthetic's when you want the same payoff characteristics as holding a stock or futures contract. It has the benefit of being much cheaper than buying stock outright.