How to How a Buy a Stock Synthetically
By huafeihua116
@huafeihua116 (453)
China
May 2, 2007 9:37am CST
It's so easy! Anybody can do it, in just a few simple steps. Before you know it you will have bought stock synthetically! Always remember to hedge your trades.
Steps
Buy a call option at a certain strike price.
Sell a put option at the same strike price.
Tips
Don't get too cocky. It looks easy and it is easy, but there is always room for error.
Warnings
In order to minimize risk, always hedge your position by shorting the same amount of stock as you just synthetically bought. Good Luck.
1 person likes this
4 responses
@romel_ece (1290)
• Philippines
3 May 07
Thanks for this valuable information my friend.It is always good to know how to buy a stock synthetically.Keep on sharing my friend.
@asahibza (388)
• Canada
2 May 07
I have tried options trading quite a bit. Unfortunately, I lost a lot of money. Judging from my experience, I would not recommend this to any one.
One can hedge. But if one has only a small amount of money and few stock holdings, hedging will not be advisable. So basically for hedging to be worthwhile, one should have a large stockholding. That is why mutual funds do hedging.
The best thing is to select stocks very carefully and then see the results. If stocks are selected wisely, one will be a winner most of the time. Oil stocks can still be good for the long run.
In order to hedge, one has to understand them thoroughly and take quick action. It is stressful. one major drawback of options is that they are time sensitive.
1 person likes this
@redyellowblackdog (10629)
• United States
2 May 07
Could you explain this using an example and show the math?
1 person likes this
@asahibza (388)
• Canada
2 May 07
I have tried options trading quite a bit. Unfortunately, I lost a lot of money. Judging from my experience, I would not recommend this to any one.
One can hedge. But if one has only a small amount of money and few stock holdings, hedging will not be advisable. So basically for hedging to be worthwhile, one should have a large stockholding. That is why mutual funds do hedging.
The best thing is to select stocks very carefully and then see the results. If stocks are selected wisely, one will be a winner most of the time. Oil stocks can still be good for the long run.
In order to hedge, one has to understand them thoroughly and take quick action. It is stressful. ne major drawback of options is that they are time sensitive.
1 person likes this
