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The synthetic short is the opposite of the synthetic long as you are aiming to get the stock to decrease in value, thus giving you a better profit. You will go short with a call option and then long with a put option while the strike price and expiration date are the same for both. This is a useful investment that pays out well if the market is bearish and the stock associated with the option decreases in value. As with the synthetic long, an investor must cover the options contract or else you might get the stock yourself. This could be a real burden considering how it might decline in value depending on the changes in the market. Don’t forget that there are no limits for how far down the value of the stock might go.
The strategies available are varied and can give you some good payouts depending on what you choose. Look carefully at how the value of the stock might change alongside an option you wish to use. You must also consider how complicated one of these options might be. You should stay with whatever you feel comfortable with at a time. You can always move into some of the more detailed and complex options over time.
