synthetic stock

A delta neutral trade is one in which a long and short option offset one another with net value or cost at or near zero. The theme of delta neutrality can refer to many differently constructed strategies, including spreads (covered and uncovered) and straddles. When an option position is...

How do you place a value on options positions within a portfolio? Actually, because of the nature of options it is extremely difficult – if not impossible – to accurately balance an asset allocation target that includes derivatives.    For example, a portfolio of $1 million specified the...

The dilemma of the long stock position is unending downside risk. This is where options serve their best purpose: as tools for portfolio management. Rather than use only as speculative and high-risk market plays, strategies like the synthetic short stock position protect against downside loss and...