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CFA Level 3
Derivatives & Currency Mgmt

Understanding Long Put and Short Call Strategies

Hard Derivative Strategies Option Strategies

Maria is managing a portfolio that heavily relies on technology stocks, and she anticipates volatility in the market following several earnings announcements in the coming weeks. To hedge her portfolio against potential downturns while still allowing for some upside participation, she decides to implement an option strategy. Upon consulting with her advisor, she considers establishing a long put and a short call.

Which of the following statements correctly describes the implications of this option strategy?

Hint

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