Synthetic
A synthetic position is a combination of two or more instruments put together so that the resulting profit-and-loss profile behaves like a completely different, usually simpler, position. Instead of owning the thing itself, you own a stand-in built out of parts that move the same way under most conditions.
The classic example lives in options. A "synthetic long stock" position is built by buying a call option (which gives you the right to buy the stock at a set price) and selling a put option (which obligates you to buy the stock at a set price if the other side chooses to exercise it) on the same underlying, with the same strike and expiration. Add those two legs together and the combined position gains and loses dollar-for-dollar with the stock almost exactly like actually owning the shares would, even though you never bought a single share. The reverse combination, selling a call and buying a put, creates a synthetic short stock position.
The nuance that trips people up is that "behaves like" is not "is identical to." A synthetic position mimics the payoff shape of the original, but the mechanics underneath differ: margin requirements, dividend treatment, assignment risk on the short option, and how the position responds to changes in implied volatility or time decay can all be different from the real thing. Two positions can look the same on a payoff diagram and still expose you to different risks depending on market conditions or how your broker treats the position.
People build synthetics for reasons like capital efficiency (options may require less capital than buying the full stock position), access (getting exposure to something hard to trade directly), or to close out one type of position while keeping the same market exposure through another.
Day traders use synthetics to get the same directional exposure as a stock trade with less capital tied up, or to route around a specific constraint like short-sale restrictions, but they need to recognize the extra layers, such as assignment risk and time decay, that a straight stock position doesn't carry.
A trader wants long exposure to a stock trading at 100 but doesn't want to tie up the capital to buy 100 shares. Instead they buy one call option at the 100 strike and sell one put option at the 100 strike, both expiring in a month. If the stock rises to 110, the call gains roughly what 100 shares would have gained, while the short put simply expires worthless. If the stock falls to 90, the short put forces a loss that mirrors what owning the shares would have cost them. Either way, the combined position tracks the stock's move almost one-for-one, which is why it's called synthetic long stock.
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