Chapter 02 · Section 2.1
The combined position
Nick is the writer of a Dec IBM 104 put for which he receives a premium of $3. He is also short 100 IBM shares to cover the position. As a result the combined position is equivalent to:
a) a short Dec 104 call at $1
b) a short Dec 104 call at $5
The profit/loss profile of a written put covered by a short position in the underlying is the same as a short call position.