- A derivative position which is created synthetically by using other derivative contracts. For example, the creation of a synthetic long future by the purchase of a call option and the sale of a put option with the same exercise price and expiry date. The ability to synthetically create any derivative position by the combination of other derivative positions leads to the concept of put/call parity, which states that there is a relationship between option and futures prices. Dresdner Kleinwort Wasserstein financial glossary
* * *synthetic syn‧thet‧ic [sɪnˈθetɪk] adjectiveproduced by combining artificial materials, rather than naturally:
• The lightweight shoes are made from synthetic suede and nylon.
* * *A financial instrument that is created by combining two or more instruments to create a new asset with distinct attributes. For example, the purchase of a call option on a share and the simultaneous sale of a put option on the same share artificially creates an asset which has the same characteristics as the underlying share and the same risks and potential rewards.
* * *Ⅰ.synthetic UK US /sɪnˈθetɪk/ adjective► made artificially and not produced from natural substances: »
synthetic fibressynthetically adverb► »
synthetically produced drugsⅡ.synthetic UK US /sɪnˈθetɪk/ noun [C]► an artificial substance or material: »
Man-made gem products are known as synthetics.»
natural fibres, such as wool and cotton, and synthetics
Financial and business terms. 2012.