Conversion
Options strategy · Level 2 · Long options & hedges
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Long stock + long put + short call, same strike and expiry. Long put + short call is synthetic short stock, so it cancels the shares: whatever happens you deliver the stock at the strike.
Where Tradecraft teaches it
Level 2 · Long options & hedges, in the lesson “Put-call parity and the conversion”: Calls, puts and stock are tied by one equation — and a conversion locks it in.
Related terms
- Long Box SpreadA long call spread plus a long put spread on the same two strikes.
- ReversalShort stock + long call + short put, same strike.
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- Early assignmentBeing made to fulfil a short American-style option before expiry because its holder exercised.
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