: Synthetic Long Stock and Option Trading: Evidence from Stock Splits examines how capital-constrained traders use this strategy to maintain market exposure.

The strategy of is known as a Synthetic Long Stock position when both options have the same strike price, or a Risk Reversal when they have different strike prices. This strategy mimics the risk and reward profile of owning the underlying stock but with significantly less capital. Core Papers and Resources

: Often established for a net credit or zero cost, as the put premium sold typically covers the call premium bought.

: Sell an Out-of-The-Money (OTM) put and buy an OTM call.

: Sell an At-The-Money (ATM) put and buy an ATM call.

: Used by investors who are bullish but want a "margin of error" before the put obligation kicks in. Key Risks to Consider

: Risk Reversal - Options Math for Traders details how this variation exploits "skew" (the price difference between puts and calls) to potentially enter trades for a net credit. Strategic Overview Synthetic Long Stock (Same Strike) :