Synthetic Call Vs. Protective Put

CFA Level II Derivatives
#1

Aren’t these 2 the same?

Both are specified as Long Stock + Long Put. Are there any differences?

Thanks

#2

Syn call also has the -bond component.

#3

Start with the put-call parity: Protective Put = Fiduciary Call or Long Stock + Long Put = Long Call + PV(X) To replicate the Long Call, rearrange the equation. Long Call = Long Stock + Long Put - PV(x) Thus, a synthetic call is the equivalent of a protective put (long stock + long put) and a short bond with PV equal to the strike price.

#4

I see what you saying about the put call parity and that is what I originally had in mind. However, Please look at page 442 int he book . 3.5 Synthetic Call. No mentioning of PV(x)… it gives the impression that they are exactly the same thing. Thanks for your input

#5

The reason why PV(x) isn’t mentioned is because its a minor factor for large movements in the stock price. So you can approximately the relationship without PV(x)

#6

There is, in fact, a mention of PV(X): footnote 15.