Chapter 06 · Section 6.1

Synthetic long underlying position

A synthetic long underlying position can be created by combining a call and a put. Of the choices listed below, which will yield a synthetic long underlying position?

a) long call low exercise & long put high exercise.
• b) long call low exercise & short put low exercise.
  Yes. This combination will yield a synthetic instrument. For example, if you had bought 10 call options on March Deutsche Mark futures and sold 10 put options on March Deutsche Mark futures. Continue
  c) short call high exercise & short put low exercise.
  d) short call high exercise & long put high exercise.

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