A synthetic futures contract uses put and call options with the same strike price and expiry date to simulate a traditional futures contract. The relationship between net gains and losses on put (blue), call (red) and synthetic attacker (yellow) is summarized in the following table: There are two types of traditional futures contracts that can be replicated by synthetic futures: a synthetic futures contract includes call options with put options to mimic the attributes of a futures contract. The term « synthetic credit » is generally used to describe an artificial financial instrument in which a loan is denominated in a basic currency (X), but is paid and repaid in another currency (Y). To create a synthetic long-term contract on a stock, buy a call with a strike price of $60 and simultaneously sell a put with a strike price of $60 and the same expiration date. At the end of the forfeiture period, the investor will purchase the underlying asset by paying the strike price, regardless of how the market evolves before that date. You don`t need extraordinary powers to understand synthetic hedges. Let`s take a look at how a simple character convention adds synthetic advance contracts. In the financial field, a synthetic position is a way to create the payment of a financial instrument with other financial instruments. Synthetic futures can help investors reduce their risk, although investors, as in the case of futures, still face significant losses if they do not implement appropriate risk management strategies. Another important advantage of a synthetic futures contract is that a « future » position can be maintained without the same requirements for counterparties, including the risk that one of the parties will abstain from the agreement. A synthetic futures contract allows an investor to benefit from the attributes and payment method of a futures contract without assuming the risks and obligations inherent in a futures contract. Synthetic loans are expected to increase the availability of long-term financing in local currency in Ukraine, which is currently in demand in the local market. Unfortunately, the high volatility of the UAH, due to both economic and political factors, has a negative impact on hedging costs for foreign lenders (which, unlike Ukrainian lenders, have access to wider hedging instruments) and Ukrainian borrowers.
Despite the initial market interest, the granting of synthetic credits in Ukraine has not yet become a high-demand financing instrument. A synthetic long-term contract can be simulated with a short option in combination with a Long Call option. Conversely, a short-term synthetic contract can be replicated by placing a long selling option with a short call. To be effective, the strike price and expiry date must be the same. For example, a long-term synthetic contract on XYZ shares would include a put option and a call option as described above, both of which would have the same expiry date (e.g. B December 31, 2009) and the strike price (e.g. B $75 USD). A synthetic futures contract uses call and sell options with the same strike price and the same period until expiry to create a clearing position. An investor can buy/sell a call option and sell/buy a put option with the same strike price and the same expiry date, with the intention of mimicking a regular futures contract.
Synthetic futures are also known as synthetic futures. In terms of the outlook, the situation does not change much. Ukrainian banks, which continue to lend funds to small and medium-sized local borrowers on synthetic loans, were also the first to attract this artificial financial instrument.