Answer: writing a put option.

## Explanation A short exposure to an underlying instrument means having a position that benefits when the price of the underlying decreases. Let's analyze each option: **A. Writing a put option:** - When you write (sell) a put option, you receive a premium and take on the obligation to buy the underlying asset at the strike price if the option is exercised. - If the underlying price falls below the strike price, the put option will likely be exercised, forcing you to buy the asset at a price higher than the market price, resulting in a loss. - This position actually creates a **long exposure** to the underlying, not a short exposure. **B. Buying a put option:** - When you buy a put option, you pay a premium for the right to sell the underlying asset at the strike price. - This position benefits when the underlying price decreases below the strike price (minus the premium paid). - Buying a put option gives you **short exposure** to the underlying instrument. **C. Buying a call option:** - When you buy a call option, you pay a premium for the right to buy the underlying asset at the strike price. - This position benefits when the underlying price increases above the strike price (plus the premium paid). - Buying a call option gives you **long exposure** to the underlying instrument. **Correct Answer Analysis:** The correct answer is **A** (writing a put option), but this requires clarification. Actually, the correct answer should be **B** (buying a put option) for achieving short exposure. Let me re-examine: 1. **Short exposure** means profiting from price declines. 2. **Buying a put option** gives you the right to sell at a fixed price, so you profit when prices fall. 3. **Writing a put option** gives you the obligation to buy at a fixed price, which is actually a bullish position. However, looking at the question format with only three options, and based on standard derivatives knowledge: - **Buying a put option** = Short exposure (correct) - **Writing a put option** = Long exposure - **Buying a call option** = Long exposure Therefore, the correct answer should be **B** (buying a put option).

Author: LeetQuiz .