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Options Strategy : Synthetic Short Futures

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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/

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