A payoff structure resembling that of a short futures position can be created by:

Question

Quizplus · Accepted Answer

A short futures position involves selling a futures contract, which profits when the underlying asset's price decreases. Choice B, selling a call option and buying a put option with the same exercise price and premium, creates a similar payoff structure. If the underlying asset's price decreases, the put option will increase in value, while the call option will decrease in value. If the asset's price remains the same or increases, both options will expire worthless, resulting in a profit equal to the premiums collected.

A Payoff Structure Resembling That of a Short Futures Position