1. Synthetic junk bonds are coming back” says the Financial Times. Respect for firewalls means I only show you the headline, go the FT for the full story.
“Demand is growing for “synthetic” financial instruments that enable investors to take positions in the US junk bond market without owning the underlying securities. The instruments, created by using credit derivatives on junk bond or high-yield indices, resemble transactions linked to US mortgages that proliferated before the financial crisis……
2. Illustrating a synthetic long stock (long call, short put) strategy here.
3. And a synthetic long call one (long stock, buy put), here.