Suppose I buy a call option with strike K and sell a put option with the same strike on the same underlying stock and with the same expiration date. What is the payoff MT at expiration for this portfolio? (Hint: It is a simple function of S and K.) Draw the corre- sponding payoff diagram. Use the definition of x+ to simplify (St K)+ (K ST)+. This - is the payoff of a position composed of a long call option and a short put option. What do you notice?