Selling a p-strike call and buying a p-strike put is the correct strategy for Allan to hedge his position. This is because the client's obligation to sell the underlying asset implies that Allan is in a long-forward position. To hedge this position, Allan needs to create a synthetic short futures contract. This can be achieved by selling a call option and buying a put option at the same strike price. This strategy effectively replicates a short forward position, thus hedging Allan's long-forward position.

For instance, if an investor has entered into a long futures contract to buy crude oil at $60 a barrel on June 30, 2022, he can create a synthetic short futures contract on oil for the same date by buying a put with a $60 strike price and selling a call with a $60 strike price. If the asset price is above the strike price on the expiration date, the investor will be obligated to buy at $60 under the futures contract and sell at $60 to the short position in the call, resulting in zero loss. If the asset price at expiration is below the strike price, the investor will be obligated to buy at $60 under the futures contract and will want to exercise the put option and sell at $60, again resulting in no loss. Thus, the long futures position combined with the synthetic short forward will hedge the contract and result in no loss for the investor, regardless of the direction the price of the asset takes.

Choice A is incorrect. Selling a p-strike call would not hedge Allan's position completely. This strategy would only limit his potential profit if the price of the underlying asset rises above P, but it does not protect him from losses if the price falls below P.

Choice B is incorrect. Purchasing a p-strike call and selling a p-strike put would create a synthetic long forward position, which would increase Allan's exposure rather than hedge it.