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   Synthetic Asset
   















 

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Synthetic Asset

A package of risks and returns created by combining other instruments to approximate very closely the package of risks and returns available in a traditional security. A position that behaves like a put, call, or some other standard instrument but has been created using different positions or dynamic trading techniques. For example, portfolio insurers create synthetic puts, equity portfolio managers often create synthetic stock or synthetic calls, index arbitrageurs may create synthetic Treasury bills, and bond futures traders may create synthetic bonds.

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