Short Synthetic
Options strategy · Level 4 · Naked options
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Sell a call and buy a put at the same strike: behaves exactly like being short 100 shares, without borrowing any.
Where Tradecraft teaches it
Level 4 · Naked options, in the lesson “Credit calendars, reverse diagonals & short synthetics”: Structures that look hedged but aren't where it counts, and the long/short calendar naming trap.
Related terms
- Calendar Spread - CreditBuy the near-term option and sell the longer-term one at the same strike.
- Diagonal Spread - Long leg expires firstBuy a near-term option and sell a longer-term one at a different strike.
- Blow-upLosing all or most of an account in a single event, usually from oversized short-vol or leveraged positions.
- Delta hedgingTrading the underlying (or futures) to offset a position's delta so small moves barely change P&L, leaving gamma, theta and vega; it must be redone…
- Fat tailsExtreme moves occurring far more often than a normal distribution predicts (excess kurtosis), so so-called 5-sigma days come much more often than a…
- Forced liquidationThe broker closing your positions itself — typically at market prices and without waiting for your deposit — to bring the account back within…