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Introducing Synthetic Futures: Your New Edge in Trading

Introducing Synthetic Futures: Your New Edge in Trading


At AlgoTest, we are constantly innovating to bring our users the most advanced and user-friendly trading tools. So we are thrilled to announce the launch of a new feature that is set to redefine the way you trade: Synthetic Futures.

What are Synthetic Futures?

Synthetic Futures are a novel method that allows traders to select strikes for Straddles with more balanced premiums, providing an edge in market prediction and strategy formulation. This feature uses a simple formula:

Synthetic Future = Spot ATM Strike – Spot ATM PE + Spot ATM CE

The ‘Spot ATM’ refers to the ‘At The Money’ strike closest to the current spot price. By calculating the Synthetic Future value, traders can make more informed decisions about which Straddle strikes to select.

How Does It Work?

Let’s break it down with an example using Banknifty Spot values:

  • Banknifty Spot: 45025
  • Spot ATM Strike: 45000
  • Spot ATM PE (Put): 275
  • Spot ATM CE (Call): 550

Using the formula, we calculate the Synthetic Future:

Synthetic Future = 45000 (Spot ATM Strike) – 275 (Spot ATM PE) + 550 (Spot ATM CE) = 45275

Once we have the Synthetic Future value, we look for the ATM strike that is closest to this value, which in this example would be 45300. This is considered the Synthetic Future ATM.

Why Use Synthetic Futures?

The primary advantage of using Synthetic Futures is that it aids in selecting Straddle strikes with premiums that are closer in value. This can be particularly useful for traders who wish to have positions with a more balanced risk profile. By employing Synthetic Futures, you can potentially reduce the slippage in trade execution and improve the overall efficiency of your trading strategies.

Get Started with Synthetic Futures

This feature is now live on the AlgoTest platform, ready for you to use. We believe Synthetic Futures will be a valuable addition to your trading arsenal, offering a new perspective on future market movements. Log in to your AlgoTest account today and experience the power of Synthetic Futures in your next trade.

We are committed to providing our traders with the best tools and features to succeed in the markets. Stay tuned for more updates and happy trading!

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