Long calls & puts
How do I execute a Synthetic Long Stock position using a combination of long calls and short puts?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A synthetic long stock position is built by simultaneously buying a call and selling a put at the same strike and expiration, replicating the risk and reward profile of owning 100 shares outright.
How it works
This combination mirrors long stock because the call provides upside participation while the short put obligates purchase on the downside, together tracking share price movement nearly one for one via combined delta near 1.0.
An example
Buying an XYZ 50 call and selling an XYZ 50 put in the same expiration creates a position that gains or loses similarly to owning 100 shares of XYZ at $50.
Risk & limitations
Synthetic positions carry assignment risk on the short put leg and require margin similar to a stock position, so they are not a cost-free substitute for actual share ownership.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.