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Recreate a Long Put's exact payoff without ever buying a put — short the underlying and buy a call. The combination behaves identically to a plain Long Put, point for point, at every price.

A Synthetic Put combines shorting the underlying with buying one call at the same strike where the short position was opened. The short position provides the downside profit a real put would have; the long call caps the loss if the underlying rises, the same way a real put's premium caps its own loss. Together, they reproduce a Long Put's shape exactly — this is the counterpart to Synthetic Long Stock and Synthetic Short Stock, except here the option and stock combination recreates an option's payoff instead of the stock's.

The long call is what makes this "synthetic" rather than just a short sale — it caps the loss on a rise, replacing the unlimited risk a plain short position would carry with the same defined-risk shape a real Long Put has.

The same three-part shape a Long Put has, built from a different combination of positions:

1. Above the strike — capped loss, flat. The short position's losses above the strike are exactly offset by the call's gains, leaving only the call's premium as the loss.
2. Between the breakeven and the strike — a shrinking loss as the underlying falls, from the short position's gains outpacing the fixed cost of the call.
3. Below the breakeven — a growing profit, the further the underlying falls.

This equivalence to a Long Put is an exact mathematical identity, not an approximation — confirmed directly for this page's own numbers before writing any of this.

A Synthetic Put fits situations where a trader wants a put's payoff shape but either can't easily buy the specific put they want, or finds the combination of a short position and a call more favorably priced. It's mainly a construction technique — a way to reach the same defined-risk, bearish payoff through a different route, not a distinct market view from simply buying a put outright.

Suppose Nifty is trading at 24,000 with a weekly expiry coming up, and lot size is 65.

1. Confirm the setup. You want a put's payoff shape, built from a short position and a call instead of buying a put directly.
2. Short the underlying at 24,000.
3. Buy 1 call at the 24,000 strike (at-the-money) for a premium of 145.
4. Calculate your max loss: the call's premium, 145 × 65 = ₹9,425. This is the most you can lose, no matter how high Nifty rises.
5. Calculate your breakeven: 24,000 − 145 = 23,855.
6. Hold the position through expiry.
7. See how it resolves at expiry:
   • Nifty finishes at or above 24,000 → the call offsets the short position's losses, you lose the full ₹9,425 premium, no more.
   • Nifty finishes at 23,855 → you exactly break even.
   • Nifty finishes at 23,000 → profit is (23,855−23,000) × 65 = ₹55,575, and it keeps growing the further Nifty falls.

Quick reference for the same trade:

Rendered using the exact mathematical equivalence to a Long Put at the same strike and premium — the real curve for the short-plus-call combination, not an approximation. Move the cursor over the chart to see profit/loss at any price.

• Shorting the underlying typically requires margin and carries its own borrowing or financing costs, which a plain Long Put wouldn't have — the "synthetic" construction isn't necessarily free of extra costs just because the option side is simple.
• Two separate positions (short stock and a call) mean more to manage than a single Long Put, including separate margin requirements.
• Index options on NSE are typically European-style and cash-settled — no early-assignment risk on the call leg before expiry.