James is with Liz and Jenny to deliver the latest research from the team and walk through a study on a typically unused synthetic trade.
They walk through a synthetic covered call position, which replicates long stock and a short call. The main takeaway is the potential return on capital benefits afforded by the synthetic stock position. Synthetic stock requires about 20% of the notional value in capital, where as the long stock requires 50%.
Looking at the historical performance the trades stack up one-for-one, leaning most of the discussion on the benefits and drawbacks of both strategies. Tune in for the full discussion!