Name: Synthetic Long
Setup: Buy (long) Strike A call and Sell (short) Strike A put – same expiration month for both
Bias: Bullish
Break-Even: Strike + Debit paid
Max Profit: Unlimited
Max Loss: Limited – Even though it is limited it can still be substantial in that the underlying can fall to $0.00
Margin: Margin requirement equals the short put requirement
Time Decay: Time decay is a neutral effect. It will lower the value of your long call and lower the value of your short put which is a good thing
Implied Volatility: Implied volatility is also a neutral effect. An increase in volatility will increase the value of your long call and it will increase the value of your short put which is not a good thing
Notes: This play replicates a long position in the underlying
Featured in Trade Review: None at this time
