Problem 2.30. What position is equivalent to a long forward contract to buy an asset at K on a certain date and a put option to sell it for K on that date? The equivalent position is a long position in a call with strike price K. INVESTMENT Cost too PAYOFF GAL (ESSK FS.>K LONG FORWARD S -K S, - k LONG POT -P K-S LONG FORWARD LONG POT - P S, -K LONG CALL - e O S,-K THUS THE PAY OFF FROM THE COMBINATION OF ALONG FORWARD AND LONG PUT IS THE SAME AS THAT OF A LONG CALL WITH EXERCISE PRICE K By IMPLICATION... P = C