Options Strategies - Part I: Asset Returns Replication (2025 Level III CFA® Exam - Reading 7)

[@abdullahnarejo1259]

at 5:25, I think there is a mistake in put option pay off function: Max (0, K-St) You will exercise your right to sell the underlying (i.e. Stocks) when the prices of underlying falls, giving you the profit= so the payoff for the holder of put option=(K-St) kindly have a look! (Payoff graph is also wrong for long put option)

[@derekmobley3253]

I'm pretty sure that's the wrong payoff for the European Put Option?

[@manishc4531]

Thanks Prof.Jim. Why didn't the synthetic equivalent include PV(K) in the 'All synthetic combinations' table?