Synthetic

What does it mean?
A financial instrument that is created artificially by simulating another instrument with the combined features of a collection of other assets.

In Other Words...
For example, you can create a synthetic stock by purchasing a call option and simultaneously selling a put option on the same stock. The synthetic stock would have the same capital-gain potential as the underlying security.

Related Links
Options Basics Tutorial - An introduction to the world of options, covering everything from primary concepts to how options work and why you might use them.

Related Terms
Call Option | Capital Gain | Put | Synthetic Lease | Underlying

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