Fidiciary Call - why do they combine the call with a bond? What is the purpose of this?
So that you have money to exercise the call and because you are investing in something.
thanks. could you elaborate a little. Still don’t understand. Thanks.
A fiduciary call is the name given to that combination. If you own a call and a zero, you have a really well-defined amount of money at option expiration (S if S > X and X otherwise). That’s the same amount of money you have if you own a put with strike X and the stock. The idea is that you can have a low downside trade in either way and they are equivalent. The call it a fidcuciary call, I suppose, because you are buying a derivative which seems speculative except that it is really a risk-reducing way of taking a long position in a stock. “Fiduciary” is a nice word that sounds responsible.