Derivatives

Callable Cap Floater Swap

February 18, 2022
Risk Management

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February 18, 2022

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A synthetic put option that is established by combining a short call with a long stock (long futures):

Synthetic short put = short call + long underlying stock

This position is practically equivalent to a short put: it is a reversed synthetic long put that has the same risk-return profile as selling a naked put having the same strike price.

It is also referred to as a a covered call or covered call write position.

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