I’ve noticed that there are two types of traders in the stock market…
There are the people who are already millionaires that are interested in investing the money they have, keep it and not risk losing any of it.
And then there are the people who have a small amount of money and are looking to make it into a large amount of money with the opportunity of massive returns. (And we’re not talking about only 5% or 10% returns).
Building a synthetic position fits the stereotype of the trader that has a small amount of money and they’re trying to leverage it for a handsome return.
A synthetic is a financial tool investors use to intimidate another investment, and a synthetic position allows traders to take positions on stocks without putting down any money to buy or sell it.
More often than not, synthetics will offer investors tailored cash flow patterns, theoretic unlimited growth potential and a set limit of risk.