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Synthetics |
Also found in: Dictionary/thesaurus, Medical, Legal, Encyclopedia, Wikipedia, Hutchinson | 0.01 sec. |
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Synthetics Customized hybrid instruments created by blending an underlying price on a cash instrument with the price of a derivative instrument. It is a combination of security holdings that mimics the price movement of another single security (i.e., synthetic call: long position in a stock combined with a put on that position; a protected long sale; synthetic put: short position in a stock combined with a call on that position; a protected short sale). Synthetic Investment A combination of investment vehicles that, when used together, can create a profit. An example is an option spread, where one takes two or more positions in option contracts in order to profit from the difference in their prices. Likewise, one may create a synthetic indexin order to outperform a real index. Institutional investors are the main creators of synthetic investments. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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