Options Strategy Guide
Synthetic Long
Replicate owning 100 shares — without actually buying them.
Advanced
Strongly Bullish
Unlimited upside and downside — mirrors stock ownership
The Simple Version
Plain English — no jargon
You want to act like you own 100 shares of a $500 stock — but you don't want to spend $50,000. So instead, you buy a call (betting it goes up) and sell a put (agreeing to buy it if it falls). The two positions together act almost exactly like owning the stock — gains, losses, everything.
How It Works — Step by Step
- 1 Buy an at-the-money (ATM) call option
- 2 Sell an at-the-money (ATM) put option at the same strike and expiration
- 3 The combination mimics owning 100 shares of stock
- 4 Profits as stock rises, loses as stock falls — just like stock ownership
- 5 Usually structured for near-zero net cost (call and put premiums roughly offset)
Real Example
AMZN
Illustrative example — not a recommendation
Stock Price
$190.0
Strike Price
$190.0
Premium Collected
$0.5/share
Days to Expiration
30d
Max Profit
$999999
Breakeven
$190.5
Annualized Return
0%
When to Use It — and When Not To
✓ Use when
- You are strongly bullish and want stock-like exposure with less capital
- You want to replicate a long stock position more efficiently
- You have margin approval and understand full downside risk
✗ Avoid when
- You don't understand that downside is unlimited (like owning stock)
- You are not approved for margin or naked options
- The stock has low liquidity or wide bid-ask spreads
Greeks & Mechanics (for the experienced trader)
Delta
Near 1.0 — behaves almost identically to owning 100 shares.
Theta
Near zero — long call and short put theta roughly cancel out.
Vega
Near zero — long call and short put vega roughly cancel out.
Gamma
Low — the position doesn't accelerate dramatically with moves.
Key Risks
- Full downside exposure — just like owning shares, you can lose a lot if stock crashes
- Short put can be assigned if stock falls below strike
- Requires margin — capital requirements can be significant
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