Synthetic Stock Positions

By Richard N. Croft

As the name suggests, a synthetic stock position is equivalent to a long stock position. Similar risk reward parameters but with some structural advantages for investors who want to utilize the strategy within registered accounts.

In this column, we will focus on Canadian bank stocks. What else is new! Like it or not banks are in a sweet spot. Expect higher interest rates which improves margins and if we get a stronger Canadian economy, more loans.  De-regulation is also a possibility which will have the greatest benefit for Canadian banks who do business in the US. That said, I am not suggesting these positions with de-regulation in mind.