Synthetic Long Stock Calculator

SyntheticbullishUndefined Risk

Buy a call and sell a put at the same strike to mimic long stock exposure.

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What Is a Synthetic Long Stock?

A synthetic long stock position, sometimes called a long combo, replicates the payoff of owning 100 shares using two options. You buy a call and sell a put at the same strike and expiration, usually at the money. The long call gives you all of the upside above the strike, and the short put gives you all of the downside below it, so the combined position gains or loses roughly one dollar per share for every dollar the stock moves, just like the stock itself.

The relationship comes from put-call parity: a call minus a put at the same strike equals the stock minus the present value of the strike. In practice the call usually costs slightly more than the put brings in, reflecting the interest saved by not paying for the shares, so the position is often opened for a small net debit. If the stock pays a dividend inside the expiration window the put becomes richer and the combo may be opened for a credit instead.

The payoff diagram is a straight line rising at a 45 degree angle, shifted left or right by the net debit or credit. There is no cap on profit and the loss grows all the way to a stock price of zero. What changes is the capital: instead of paying $10,000 for 100 shares, you post margin on the short put, typically 20 percent or less of the stock value, which gives the position significant leverage.

Setup

BUY1x ATM CALL

SELL1x ATM PUT

Max Profit

Unlimited

Max Loss

Large downside risk similar to owning stock

Breakeven

Strike + net debit, or strike - net credit

Synthetic Long Stock Example

XYZ trades at $100 with 60 days to expiration. You buy the $100 call for $5.00 and sell the $100 put for $4.60. The net debit is $0.40 per share, or $40 per combo. The position behaves like 100 shares bought at $100.40.

Stock at expiration	Result
$110	The $100 call is worth $10.00 and the put expires worthless. Profit is $1,000 minus the $40 debit, or $960. Owning 100 shares from $100 would have made $1,000.
$100.40	Breakeven. The call is worth $0.40, exactly offsetting the debit. P&L is $0.
$100	Both options expire worthless at the strike. You lose the $40 debit.
$90	The call expires worthless and the $100 put is assigned, obliging you to buy 100 shares at $100 that are worth $90. Loss is $1,000 plus the $40 debit, or −$1,040.

Profit is unlimited above the $100.40 breakeven and tracks the stock nearly dollar for dollar. Loss is also unlimited down to a stock price of zero, where it would reach $10,040. The combo mirrors 100 shares at $100.40 while tying up a fraction of the $10,000 the shares would cost.

When to Use a Synthetic Long Stock

You are strongly bullish and want full stock-like exposure with less capital than buying shares outright.
The stock is hard to borrow or you cannot trade it directly, and the option market offers a cleaner way to take the position.
Put premiums are inflated by heavy demand for downside protection, which lets you open the combo for a credit or a smaller debit than parity suggests.
You already hold a short call or long put and want to neutralize it into a stock-equivalent position with one additional leg rather than closing and re-entering.
Typical entries use at-the-money strikes and 45 to 90 days to expiration so that the position has time to work before it needs to be rolled or closed.

Risks to Understand

The downside is the same as owning stock. A large drop produces a large loss, and because you posted margin rather than the full share price, the loss can exceed the cash you set aside.
The short put can be assigned early once it is in the money, converting the combo into actual shares that require the full purchase price.
You do not receive dividends. If the stock goes ex-dividend inside the window, the shares drop by the dividend and the combo loses that amount without any offsetting payment.
Margin requirements on the short put rise as the stock falls and as implied volatility increases, so a sharp sell-off can trigger a margin call at the worst possible time.
The position has a fixed expiration. To maintain exposure you must roll both legs, paying two more bid-ask spreads each time.

Managing the Trade

Treat it like stock and set the same stop-loss level you would use for shares; the leverage makes losses arrive faster in percentage terms.
Roll both legs to a later expiration a few weeks before expiry if you want to keep the position, ideally when the stock is near the strike so the roll is nearly cost neutral.
If the stock rallies well above the strike, the short put becomes nearly worthless and can be closed for pennies, leaving a plain long call with no downside beyond its remaining value.
Selling an out-of-the-money call against the combo converts it into a synthetic covered position, adding income and capping the upside.
Watch ex-dividend dates. If the short put is deep in the money before one, expect early assignment and be prepared to hold or sell the shares.

Synthetic Long Stock FAQs

What is a synthetic long stock position?: It is a long call and a short put at the same strike and expiration, which together replicate the profit and loss of owning 100 shares. Above the strike the call gains like stock; below it the short put loses like stock. The combination has a delta close to 1.00 and nearly no exposure to time decay or implied volatility.
How do you calculate the breakeven on a synthetic long stock?: Breakeven is the strike plus the net debit paid, or the strike minus the net credit received. Buying a $100 call for $5.00 and selling a $100 put for $4.60 costs $0.40, so breakeven is $100.40. Above that price the position profits; below it the loss grows dollar for dollar.
Why is a synthetic long stock cheaper than buying stock?: You pay only the small net debit plus margin on the short put, typically 15 to 25 percent of the stock value, instead of the full share price. That leverage is the appeal, but the dollar risk is unchanged. If the stock falls 20 percent you lose roughly $2,000 per combo, the same as holding 100 shares.
Is synthetic long stock risky?: It carries the same downside as owning shares, with the added dangers of leverage, early assignment on the short put, and margin calls if the stock falls sharply. It is not a defined-risk strategy. Traders should size it as they would a stock position of the same notional value, not by the small debit paid.
Synthetic long stock vs risk reversal: what is the difference?: A synthetic long uses the same strike for the call and put, so it tracks the stock everywhere. A bullish risk reversal buys an out-of-the-money call and sells an out-of-the-money put, leaving a flat zone between the strikes where the position neither gains nor loses. The risk reversal is usually cheaper or opened for a credit, at the cost of needing a bigger move before the call kicks in.
What happens to a synthetic long stock at expiration?: If the stock is above the strike, the call is exercised and you buy 100 shares at the strike. If it is below, the put is assigned and you also buy 100 shares at the strike. Either way you end up owning stock unless you close the position beforehand, so make sure you have the capital or exit before the final day.

Related Strategies

Risk Reversal Long Call Short Put (Naked Put)

What Is a Synthetic Long Stock?

Synthetic Long Stock Example

Stock at expiration	Result
$110	The $100 call is worth $10.00 and the put expires worthless. Profit is $1,000 minus the $40 debit, or $960. Owning 100 shares from $100 would have made $1,000.
$100.40	Breakeven. The call is worth $0.40, exactly offsetting the debit. P&L is $0.
$100	Both options expire worthless at the strike. You lose the $40 debit.
$90	The call expires worthless and the $100 put is assigned, obliging you to buy 100 shares at $100 that are worth $90. Loss is $1,000 plus the $40 debit, or −$1,040.

When to Use a Synthetic Long Stock

You are strongly bullish and want full stock-like exposure with less capital than buying shares outright.

The stock is hard to borrow or you cannot trade it directly, and the option market offers a cleaner way to take the position.

Put premiums are inflated by heavy demand for downside protection, which lets you open the combo for a credit or a smaller debit than parity suggests.

You already hold a short call or long put and want to neutralize it into a stock-equivalent position with one additional leg rather than closing and re-entering.

Typical entries use at-the-money strikes and 45 to 90 days to expiration so that the position has time to work before it needs to be rolled or closed.

Risks to Understand

The downside is the same as owning stock. A large drop produces a large loss, and because you posted margin rather than the full share price, the loss can exceed the cash you set aside.

The short put can be assigned early once it is in the money, converting the combo into actual shares that require the full purchase price.

You do not receive dividends. If the stock goes ex-dividend inside the window, the shares drop by the dividend and the combo loses that amount without any offsetting payment.

Margin requirements on the short put rise as the stock falls and as implied volatility increases, so a sharp sell-off can trigger a margin call at the worst possible time.

The position has a fixed expiration. To maintain exposure you must roll both legs, paying two more bid-ask spreads each time.

Managing the Trade

Treat it like stock and set the same stop-loss level you would use for shares; the leverage makes losses arrive faster in percentage terms.

Roll both legs to a later expiration a few weeks before expiry if you want to keep the position, ideally when the stock is near the strike so the roll is nearly cost neutral.

If the stock rallies well above the strike, the short put becomes nearly worthless and can be closed for pennies, leaving a plain long call with no downside beyond its remaining value.

Selling an out-of-the-money call against the combo converts it into a synthetic covered position, adding income and capping the upside.

Watch ex-dividend dates. If the short put is deep in the money before one, expect early assignment and be prepared to hold or sell the shares.

Synthetic Long Stock FAQs

What is a synthetic long stock position?

It is a long call and a short put at the same strike and expiration, which together replicate the profit and loss of owning 100 shares. Above the strike the call gains like stock; below it the short put loses like stock. The combination has a delta close to 1.00 and nearly no exposure to time decay or implied volatility.

How do you calculate the breakeven on a synthetic long stock?

Breakeven is the strike plus the net debit paid, or the strike minus the net credit received. Buying a $100 call for $5.00 and selling a $100 put for $4.60 costs $0.40, so breakeven is $100.40. Above that price the position profits; below it the loss grows dollar for dollar.

Why is a synthetic long stock cheaper than buying stock?

You pay only the small net debit plus margin on the short put, typically 15 to 25 percent of the stock value, instead of the full share price. That leverage is the appeal, but the dollar risk is unchanged. If the stock falls 20 percent you lose roughly $2,000 per combo, the same as holding 100 shares.

Is synthetic long stock risky?

It carries the same downside as owning shares, with the added dangers of leverage, early assignment on the short put, and margin calls if the stock falls sharply. It is not a defined-risk strategy. Traders should size it as they would a stock position of the same notional value, not by the small debit paid.

Synthetic long stock vs risk reversal: what is the difference?

A synthetic long uses the same strike for the call and put, so it tracks the stock everywhere. A bullish risk reversal buys an out-of-the-money call and sells an out-of-the-money put, leaving a flat zone between the strikes where the position neither gains nor loses. The risk reversal is usually cheaper or opened for a credit, at the cost of needing a bigger move before the call kicks in.

What happens to a synthetic long stock at expiration?

If the stock is above the strike, the call is exercised and you buy 100 shares at the strike. If it is below, the put is assigned and you also buy 100 shares at the strike. Either way you end up owning stock unless you close the position beforehand, so make sure you have the capital or exit before the final day.