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Glossary of Option Terms: Synthetic Option
Synthetic Option
Definition: Also known as a protected long. An option created by a combination of two options or an option and shares. It is "synthetic" because the two instruments being "synthesized"- or put together- have the same effect as a different investment.
Here’s an example: A synthetic long call is created by holding a long position in a stock and buying a put on it at the same time. It is the equivalent of buying a call (that’s why they call it a synthetic long call).
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