Options - Creating Synthetic Positions
These payoff diagrams show how to create synthetic option or underlying positions through combining calls, puts, and the underlying.
A long call and a short put position is similar to being long a stock. A long put and a short call position is similar to being short a stock. A long stock and a long put position is similar to being long a call option. A long call and a short stock position is similar to being long a put option.
Call – Put = Long Stock
Put – Call = Short Stock
Stock + Put = Call
Call – Stock = Put
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