Introduction to Synthetics

Over the next several weeks we are going to be re-starting our instructional series on our synthetic long stock strategy.  This introduction describes how options can be used to create a position that mimics owning 100 shares of stock while tying up about a quarter of the funds that it would if we were to purchase those shares outright.

There are several benefits to this strategy over other option strategies, starting with the fact that it can be managed essentially the same way that one might manage their position if they owned the stock itself.  This means that we manage these positions as investments, not quick trades.

The presentation material is available here.

During the next meeting, we’ll be discussing an overview of the strategy that we have been  using in our group paper-trading account.