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Bullish Patterns
Long Calls
Bull Call Spread
Bull Put Spread
Call Backspread
Long Call Ratio Spread
Naked Put
Synthetic Long Stock
The Collar
Covered Calls
Synthetic Long Call
Synthetic Short Put
Covered Straddle
Covered Strangle
Married Put
Protective Put

Bearish Patterns
Long Puts
Bear Put Spread
Bear Call Spread
Put Backspread
Long Put Ratio Spread
Naked Calls
Synthetic Short Stock
Synthetic Short Stock (split strikes)
Covered Put
Protective Call
Synthetic Short Call
Synthetic Long Put

Long Volatility
Long Straddle
Long Strangle
Short Call Butterfly
Short Put Butterfly
Short Iron Butterfly
Short Call Condor
Short Put Condor
Short Iron Condor
Long Guts
Strip
Strap
Short Call Ladder
Short Put Ladder
Long Call Synthetic Straddle
Long Put Synthetic Straddle

Short Volatility
Short Straddle
Short Strangle
Long Call Butterfly
Long Put Butterfly
Long Iron Butterfly
Long Call Condor
Long Put Condor
Long Iron Condor
Short Guts
Long Call Ladder
Long Put Ladder
Call Ratio Spread
Short Call Ratio Spread
Put Ratio Spread
Short Put Ratio Spread
Ratio Call Write
Ratio Put Write
Short Call Synthetic Straddle
Short Put Synthetic Straddle
Variable Ratio Write

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Synthetic Long Stock

Risk: limited but very big
Reward: limited

General Description
Entering a synthetic long stock entails buying calls and selling an equal number of puts at the same strike (same expiration month).

(draw a synthetic long stock risk diagram here)

The Thinking
You're bullish and are confident a stock will move up. Instead of buying the stock outright, which is expensive, you replicate the gain/loss you would experience if you were long the stock for a fraction of the cost.

Example

XYZ is at $50. Instead of buying the stock, you buy (1) 50 call for $4.00 and sell (1) 50 put for $3.50. Your net debit it initiate the trade is $0.50.

If the stock moves up to $60 at expiration, the 50 call will be worth $10 (netting you a profit of $6.00), and the puts will be worthless (netting you a profit of $3.50). Your total profit is $9.50 (because of the different in premium between the call and put, your profit isn't $10.00).

If the stock moves down to $40, the 50 call will be worthless (netting you a loss of $4.00), and the 50 put will be worth $10.00 (netting you a loss of $6.50). The total loss is $10.50 (again because of the difference in premiums when the trade was initiated).

So this trade pretty closely mimics what it'd be like if you just bought the stock outright, but it’s not perfect.

The PL chart below graphically shows where this trade will be profitable and at a loss.