A THREAD ON OPTIONS SYNTHETICS, LONG READ:

With synthetics you can increase your returns as the margin requirements/costs are less. Everyone wanting to become a top trader needs to know this and get their concepts cleared because many people don't know what they're doing

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Synthetics are formed by the mixture/combinations of any two of the following three.
1. Calls
2. Puts
3. Futures/Stocks

You don't even need to touch futures/stocks. Whatever kind of payoff graph you want, you can get via options only.

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Fut buy + Put buy= Call buy
Fut buy + Call sell = Put sell
Fut sell + Call buy = Put Buy
Fut sell + Put sell = Call sell

Fut buy = Call Buy + Put Sell
Fut sell = Put Buy + Call Sell

Know this very well as this is must to know. Now I'll show you how to increase returns.

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Synthetics will be used to handle margin requirements better thereby increasing your leverage.

For eg, you want to buy a stock you have to pay huge margin.

Instead of that you can buy an ATM call and sell an ATM put. Margins are drastically lower via options.

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We cannot short stocks in India, we need to trade via futures. Some big traders like Sundar Sir, they don't like to trade in futures as they trade via collateral and mtm loss needs to be paid daily. Synthetics take care of that as u only have to pay the loss when booked.

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