If you combine a long stock position with buying an at the money put option the resulting net payoff profile will resemble the payoff profile of a _______.
A) long call
B) short call
C) short put
D) long put

Question

Quizplus · Accepted Answer

Combining a long stock position with buying an at-the-money put option creates a protective put strategy, which resembles the payoff profile of a long call option. This is because the put option provides downside protection, while the stock allows for upside potential, similar to a long call.

If You Combine a Long Stock Position with Buying an at the Money