Synthetic financial instruments are designed to mimic other financial products while changing important properties, such as duration and cash flow.

Investors often request custom cash flow patterns, maturity dates, risk profiles, and other features from synthetics. Investors can tailor the structure of synthetic products to their specific needs. A variety of factors motivate the creation of synthetic positions:

A synthetic position, for example, can replicate the reward of a financial instrument by combining different financial products.
Rather than borrowing stock and selling it short, a trader can establish a synthetic short position by using options. Traders can use options to simulate a long position in a stock without having to buy the shares, which also applies to long positions.