Buying stocks can require significant capital.
For example, in a margin account:
- 100 SPY controls $13,000 in BP
- 100 QQQ controls $7,000 in BP
Synthetics can reduce these requirements.
In the segment today, Tom and Tony breakdown ways that we can use options to replicate stock positions.
This type of trade in known as a synthetic, because the position will act as if you are actually long or short the underlying.
If you are looking to expand your knowledge of options, this is definitely a segment you do not want to miss!