Synthetic Short Stock

Description

Selling an ATM Call and buying an ATM Put.

Trading Logic

Mimics shorting a stock.

Practical Example

Stock at $100. Sell $100C, buy $100P.

P/L Curve

Chart Description
  • X-Axis: Stock price at expiration
  • Y-Axis: Expected P/L ($)
  • Green area: Profit; Red area: Loss