I am long Nasdaq futures because the financial conditions are ridiculously easy given all of the stimulus. However, we are going into earnings to I decide to buy a protective put. This means my synthetic position is

Question

BlackTom AI · Accepted Answer

The prompt describes being long Nasdaq futures and then buying a protective put as a hedge around that position.
Option setup: The only listed choice is 'Synthetic long call.'
First, consider what a synthetic long call represents in standard options theory: a long call can be replicated synthetically by combining positions in the underlying asset and puts such that the payoff mirrors that of a call.
In the context of futures, going long the futures contract provides you with the obligation to buy at a future date at the futures price, capturing upside if the price rises and limiting downside to the extent of the premium and move against you if the market falls.
Introducing a protective put on that long futures position adds a floor to losses while still allowing upside above the strike, effectively creating a payoff structure similar to owning a call option on the same underlying with the same expiry and strike—because as prices rise, the call-like exposure dominates, while the put provides downside protection that shapes the payoff akin to a long call synthetic.
A common way to think about this is via the put–call–forward relationships: a long forward (or futures) position combined with a long put can resemble a long call when the strike and maturity align, due to the way the payoffs offset and convert into a call-like payoff profile.
The other potential interpretations would require additional instruments or mismatches in strike/maturity; with just a long futures plus a protective put, the resulting composite payoff behaves like a synthetic long call rather than, say, a synthetic long put or some other construct.
In summary, the described position—long Nasdaq futures plus a protective put—fits the idea of a synthetic long call, since the combination yields a call-like payoff structure while providing downside protection through the put.

fin_412_120258_251367 Test 1 in class

I am long Nasdaq futures because the financial conditions are ridiculously easy given all of the stimulus. However, we are going into earnings to I decide to buy a protective put. This means my synthetic position is

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