Short Synthetic Future – When You Want Full Downside Exposure Without Futures

Short Synthetic Future – When You Expect Declines but Seek Capital Efficiency (Illustrative Example:

| December 2024 | Historical Price Reference: ₹4500) Market View Bearish. This strategy is used when you expect the underlying stock to move lower or remain capped, mimicking a short futures position using options. In this illustrative case, HEROMOTOCO was trading near ₹4500 in December 2024, and the expectation was for limited upside or a moderate decline. The Trade (Illustrative | Hypothetical Premiums) • Sell HEROMOTOCO 4500 Call @ ₹150 • Buy HEROMOTOCO 4500 Put @ ₹140 Net Premium: ~₹10 Paid / Received (illustrative) (Strikes and premiums are illustrative and used for teaching the concept.) Breakeven • Strike ± Net Premium → Breakeven ≈ 4500 + 10 = ₹4510 (if net paid) Max Profit • Unlimited if HEROMOTOCO falls sharply below breakeven Max Loss • Unlimited if HEROMOTOCO rallies sharply above breakeven Premium & Margin • Premium: Near-zero or marginal • Margin: Required (due to sold call) Effect of Time & Volatility • Time decay impact is negligible as call and put offset each other • Volatility effect is minimal, as both legs respond similarly Quick Logic Check (Important) • Replicates short futures exposure • Best used when liquidity is good on both legs • Directional conviction must be strong; risk is high ________________________________________ 📌 Disclaimer: This content is for information only and not investment advice. Investments in securities market are subject to market risks. Read all the related documents carefully before investing. AI may have been used for grammatical and sentence-structure refinement. Please consult a SEBI-registered advisor before making any investment decisions.