Synthetic short stock
Short call and long put at the same strike: moves one for one against the shares.
Bearish2 legsCredit
Illustrative: underlying at 100, strikes every 2.5, 45 days to expiry, implied volatility 25%, model prices. One lot = 100 shares.
Key figures
| Opens for | a credit of $55 |
|---|---|
| Max profit | +$10,055 if the shares went to zero |
| Max loss | Open-ended as the price rises |
| Break-even | 100.55 |
| Position delta today | −100 shares |
| Outlook | Bearish |
The legs
| Action | Quantity | Option | Model price |
|---|---|---|---|
| Sell | 1 | 100 call, 45 days | 3.77 |
| Buy | 1 | 100 put, 45 days | 3.22 |
How it works
Short call and long put at the same strike: moves one for one against the shares. Combinations mix calls and puts to shape the payoff, often to pay for one part of the trade with another.
When it fits
It suits a view that the underlying stays down or falls before expiry.
What can go wrong
The loss is open-ended if the price rises sharply, so position size and a plan for closing early matter. Short options can be assigned early, and a sharp fall with implied volatility rising can hurt more than the expiry line suggests, which is what the crash band shows.
Building it in Trident
In the Strategy Lab, choose synthetic short stock and the days to expiry. Trident applies these strike rules to your live chain, prices each leg and draws the trade on the risk graph, where you can drag the days to expiry, change implied volatility or switch on the crash band. When it looks right, send it to order management; nothing reaches your broker until you send it.
Frequently asked questions
What is a synthetic short stock?
Short call and long put at the same strike: moves one for one against the shares.
What is the maximum loss on a synthetic short stock?
It is open-ended if the price rises sharply.
Where does a synthetic short stock break even?
With the underlying at 100 in this illustrative example, the break-even at expiry is 100.55.
Can I build a synthetic short stock in Trident?
Yes. Pick it in the Strategy Lab and Trident chooses the strikes from your live chain, prices the legs and draws it on the risk graph.
Illustrative example with model prices, not a recommendation. Options carry risk of loss. See the risk disclosure.