The case mentions creating a synthetic short, which the answer says it’s a combo of short call and long put. Why is that?
I was thinking of the put call parity…is that applicable?
From put-call parity:
c + X = p + S
-S = p - c - X
So short underlying = long put, short call, short bond
Or try a graph: combine a long put with a short call with the same strike price.