If you are short a call and long an otherwise identical put on the same stock, where the strike price is the forward price of the stock for the same maturity as the options, you essentially have the following position:
A) A short forward on the stock for the maturity of the option.
B) A synthetic collar.
C) An options position for which you pay a positive net premium up front.
D) An options position for which you receive a net premium up front.

Question

Quizplus · Accepted Answer

This position is equivalent to being short a forward contract on the stock. When you are short a call and long a put with the same strike price and maturity, and the strike price is the forward price of the stock, it creates a payoff identical to selling the stock forward. This is because you are obligated to sell the stock at the strike price if the call is exercised (short call) and have the right to sell the stock at the strike price if the stock's price falls (long put), effectively locking in the sale price of the stock at the strike (forward) price.

If You Are Short a Call and Long an Otherwise