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.
• c) short call high exercise & short put low exercise.
  No. This combination will give you a short strangle.
  d) short call high exercise & long put high exercise.

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