Synthetic Longs

A synthetic long is an options strategy that replicates the performance of owning the underlying asset. It is created by buying a call option and selling a put option with the same strike price and expiration date.

This combination creates a position that has the same delta as owning the asset directly. Synthetic longs are often used by traders who want to gain exposure to an asset without using as much capital as a direct purchase.

They can also be used to leverage a position or to take advantage of pricing discrepancies between options and the underlying asset. In the context of crypto, synthetic longs allow traders to gain exposure on platforms that may not support direct spot trading.

It is a flexible strategy that can be adjusted to suit different market views. However, it involves the risks associated with both long and short options, including margin requirements and potential assignment.

It is a fundamental building block for more complex derivatives structures.