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All-StarsBearish
Synthetic Short Stock
Overview
Creates a position that behaves identically to being short 100 shares of stock using options only. Selling a call and buying a put at the same strike mirrors the risk/reward of short selling with potentially less capital.
Max Profit
Substantial (to strike price × 100)
Max Loss
Unlimited (stock can rise infinitely)
Breakeven
Strike Price - Net premium paid/received
Structure
Short 1 ATM Call + Long 1 ATM Put (same strike, same expiry)
Risk Profile
Substantial profit potential. Unlimited risk to upside. Mirrors short stock P&L.
When to Use
When you want short stock exposure using options. Can be more capital efficient than shorting stock. When shares are hard to borrow.