A synthetic long put is created when short stock position is combined with a long call of the same series.
Position construction
Short 100 Underlying, Buy 1 ATM Call
The synthetic long put is so named because the established position has the same profit potential as long put.
Unlimited Profit Potential
Maximum profit
Unlimited
Profit achieved when: Price of Underlying < Sale Price of Underlying - Premium Paid
Profit = Sale Price of Underlying - Price of Underlying - Premium Paid
Limited Risk
Maximum loss
Premium Paid + Commissions Paid
Loss occurs when: Price of Underlying = Strike Price of Long Call
Breakeven point
Breakeven
Sale Price of Underlying - Premium Paid