A strategy for options trading designed to imitate a long stock position. A synthetic long stock is created by purchasing at-the-money calls and then selling an equivalent number of at-the-money puts with the same expiration date. The downside of a synthetic long position is the unlimited amount of risk it is capable of creating (though the opposite is also true in that there is a potential for unlimited gain). A synthetic position is also favorable for traders looking to trade without losing all liquidity by tying up all their investment capital in the purchase of shares outright. A synthetic long position can be entered into with a small amount of capital as the cost of the call options is partially offset by the profit from selling put options.
We don't know everything about the markets. We're just devoted to learners. Taken from those smarter than ourselves, here's how we define Synthetic Long.