Synthetic breakeven
Definition · Level 3 · Spreads & short options
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For a long call plus short put at one strike: the strike plus the net debit (or minus the net credit). It is where the stock must be at expiry for the pair to break even.
Example
Buy the 50 call at 2.80, sell the 50 put at 2.30 → breakeven 50.50.
Where Tradecraft teaches it
Level 3 · Spreads & short options, in the lesson “Synthetic stock and what it replaces”: A long call plus a short put as a stand-in for shares: breakeven, carry, and what you give up.
Related terms
- Stock replacementHolding the same exposure as shares with less cash up front, using options (a deep in-the-money call, or a long call plus short put) instead of the…
- SyntheticBuy a call and sell a put at the same strike.
- Back-spread danger zoneWhere a back spread loses the most at expiry: the stock sitting at the long strike.
- BodyThe middle strike of a butterfly, short in a long fly: where a long fly earns the most at expiration.
- Breakeven win rateHow often a trade must win just to net zero, treating each outcome as a full win or a full loss: max loss ÷ (max profit + max loss).
- Broken-Wing ButterflyA butterfly with one wing pushed out: buy one call, sell two, and buy one much further away, so the two wings are different widths.