For those who regularly use synthetic long stock positions (long call / short put at same strike/expiry) versus simply buying LEAPS, what are your primary considerations for choosing one over the other? I'm finding the capital efficiency of synthetics appealing but the gamma profile can be more dynamic.
I use both, honestly. Synthetics for shorter-term directional plays where I want to maximize leverage, and LEAPS for longer-term, buy-and-hold type conviction on a stock I believe will trend up over years.
Have you considered the dividend aspect? If the stock pays a dividend, the short put leg of the synthetic can be less appealing. LEAPS avoid that altogether.
While capital efficiency is nice, the continuous monitoring required for synthetics to maintain that delta-one exposure can be a drag. Sometimes the simplicity of a long-dated call is worth the extra premium.
I'm with you on the capital efficiency, especially for high-priced stocks. The gamma can be a wild card, but if you're comfortable managing deltas, synthetics often win out for me.
For me, it often comes down to the underlying's volatility. If it's choppier, I prefer the defined risk of LEAPS. Synthetics are great when I have a strong conviction on direction and less worried about whipsaws.