Options Strategy : Synthetic Short Futures strategy is executed when a trader is Bearish on underline futures contract .
But instead of Selling a Futures Contract executes a Options Strategy : Synthetic Short Futures .
Synthetic Short Futures Strategy
Buy ATM Put
Sell ATM Call
The Trader instead of Buying a Futures Contract Buy ATM Put and Sell ATM Call of same expiry as underline Futures Contract .
Let me Explain with an Example :
A Trader instead of
Selling a Nifty Futures Contract of 26-Aug-21 : 16248
Buy ATM Put Strike 16200 of 26-Aug-21 : 60
Sell ATM Call Strike 16200 of 26-Aug-21 : 113
Synthetic Short Futures Strategy Formula
Strike Price of Long Put – Price of Underlying + Net Premium Received
16200-16248-60+113 = +5
Advantage :
1. Lower Margin than Long Futures
2. Lower Brokerage than Long Futures
Options Chain NSE : https://www.nseindia.com/option-chain
Also Read Options :https://financeloaninsurance.com/riskless-algo-strategy-reversal/