Synthetic Mortgage Backed Security

Put-Call Parity describes an equality relationship that must exist across call and put options on a given security, assuming the same expiration date and exercise price. Given this relationship, traders are able to create "synthetic" positions. Such positions allow investors to mimic the payoffs of an actual position in the underlying investment. Recently, the lack of available liquidity in CMBS (commercial mortgage backed securities) has led investors to create synthetic positions in these assets. See article here, Reuters.