Synthetic Put Calculator

A synthetic put is one hundred shares sold short plus a long call. The call caps the loss if the stock rallies, since the shares can be bought back at the strike, and the combination behaves like a long put at that strike. It is used when a put is hard to buy or when a short stock position already exists and needs protection.

When it is used

Traders who are short a stock buy a call to put a ceiling on the loss through an event, which is the same reasoning as a married put for a long holding. The synthetic form sometimes prices differently from an actual put because of borrow costs and dividends on the short shares, and the calculator shows the option side of that comparison.

How it makes and loses money

A falling stock makes money, one for one below the strike minus the premium, down to a stock price of zero. A rally loses up to the strike and then stops. Time decay works against the call every day, and a rise in implied volatility helps it. Dividends owed on the short shares are not part of the model.

What to check in the grid

The top rows go flat above the call strike, the floor on the loss. Compare the position with the Long Put at the same strike: the shapes match, and the difference in cost is what a short-stock position pays or saves versus buying the put outright.