Uncovered & Covered Option Synthetic Futures & Options

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Uncovered & Covered Option Synthetic Futures & Options
Uncovered Option
 No offsetting positions
 Unlimited potential losses.
 Attractive profits
 Risk tolerance
Covered Option
 Offsetting positions
 Covered call sale= short call + Long futures
 Covered put sale= short put + short futures
Synthetic Futures
 Combining two option position
 Synthetic long futures=long call+ short put
 Synthetic short futures= long put + short call
Synthetic Option
Combining options and futures position
 Long Call = Long futures + Long Put.
 Short Call = Short futures + Short Put (also known as 'Covered Put').
 Long Put = Short futures + Long Call.
 Short Put = Long futures + Short Call (also known as 'Covered Call').