Answer: Payoff of a long put plus short call

## Explanation A short position in a futures contract has a **linear payoff** that decreases as the underlying price increases. The payoff diagram is a straight line with negative slope. Let's analyze the options: - **Long call + Short put (synthetic long)**: This creates a payoff similar to a **long** futures position, not short. - **Long put + Short call**: This combination creates a payoff that: - When underlying price increases: short call loses money, long put expires worthless - When underlying price decreases: long put makes money, short call expires worthless - The payoff diagram is a straight line with negative slope, exactly matching a **short futures position** This is known as a **synthetic short futures position**. The payoff (not profit) of long put plus short call perfectly replicates the economics of a short futures contract.

Author: LeetQuiz .