A Synthetic Short Call is created when short stock position is combined with a short put of the same series.
Sell short 100 shares; Sell 1 put.
The Synthetic Short Call is so named because the established position has the same profit potential a short call.
Limited Profit Potential
Stock sale price minus the put strike price, plus the premium received.
The diagram and calculator use this example: Short 100 shares at $50; Sell 1 $50 put option at $3 per share. All options share one expiration and a 100-unit multiplier. Fees are zero in this example.
Unlimited Risk
Unlimited as the stock price rises.
Breakeven Point(s)
Stock sale price plus the put premium received, provided that price is at or above the put strike.
Before expiration and assignment
The diagrams and worked outcomes describe expiration payoffs, not an option’s market price before expiration. Time decay, implied volatility, rates, dividends and bid-ask spreads affect early closing values. American-style short options can be assigned early; a protective long option is not automatically exercised when a short leg is assigned. Closing or exercising one leg can change the remaining position’s risk.
Amounts are per share before fees. Multiply by the shares covered by the position; standard equity options usually cover 100 shares per contract. If a maximum profit or loss calculation gives a negative amount, use zero. These figures assume matching contracts held to expiration and do not include financing or early assignment.
