Catchword: synthetic short

Filed under: English, Money & Finance, Jargon

Part of speech: n.

Quotation: At a time when traders would normally have shorted the stock as part of the trade, they’re instead bypassing the rising cost of doing so by assembling what are called “synthetic shorts.” In case you’re not familiar with that term, synthetic shorts are a specialized type of options trade that involves buying puts and selling calls at the same strike prices to achieve the same risk/reward profile as an outright short in Citi stock. The advantage of a synthetic short is that you don’t have to go through the hassle of actually shorting the stock, or trying to borrow it in a hard-to-borrow market.

Article or document title:
“Citigroup Stock Drama: Capitalist Conspiracy or Pursuit of Profits?” (URL)

Author:
Keith Fitz-Gerald

Article, document, publication, web site:
Money Morning

Date of publication:
April 21, 2009

This catchword has yet to be researched.