A trader buys a call and sells a put with the same strike price and maturity date.What is the position equivalent to?
A) A long forward
B) A short forward
C) Buying the asset
D) None of the above

Name: A trader buys a call and sells a put with the same strike price and maturity date.What is the position equivalent to? A) A long forward B) A short forward C) Buying the asset D) None of the above
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Quizplus · Accepted Answer

From adding up the two payoffs we see that A is true: max(S_T−K,0)−max(K−S_T,0)= S_T−K

A Trader Buys a Call and Sells a Put with the Same