Explanation

A short futures position has a linear payoff that decreases as the underlying asset price increases. The payoff diagram is a straight line with a negative slope.

Let's analyze the options:

Option A: Payoff of long call + short put

• Long call payoff: max(S - K, 0)
• Short put payoff: -max(K - S, 0)
• Combined payoff: max(S - K, 0) - max(K - S, 0) = S - K
• This creates a long forward/futures position (positive slope)

Option B: Profit of long call + short put

• This includes premium costs, which creates a non-linear profit profile
• Not equivalent to a futures position

Option C: Payoff of long put + short call

• Long put payoff: max(K - S, 0)
• Short call payoff: -max(S - K, 0)
• Combined payoff: max(K - S, 0) - max(S - K, 0) = K - S
• This creates a short forward/futures position (negative slope)

Option D: Profit of long put + short call

• This includes premium costs, creating a non-linear profit profile

Key Insight:

• The payoff (not profit) of a long put plus short call exactly replicates a short futures position
• This is known as a synthetic short futures position
• The payoff is K - S, which decreases linearly as the underlying price increases

Therefore, option C is correct as it most closely simulates the economics of a short futures position.