A synthetic short put is created when long stock position is combined with a short call of the same series. It is so named because the established position has the same profit potential a short put.
The covered call is a popular example of a synthetic short put.
When to Use
1.In bearish momentum but want limited risk.......
2,The more bearish you are the further from the futures (higher strike price) you can buy, although a true synthetic put involves an at the money call option
3.Like the long put this position gives you substantial leverage with unlimited profit potential and limited risk
4. Your loss limited to the difference between the futures entry prices and call strike price plus the premium paid for the option
5.Your maximum loss occurs if the market is above the option strike price at expiration