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The replicating portfolio for a European call option involves a long position in A , while the replicating portfolio for a European put option involves a short position in A .

Can you explain why this is the case in general?

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  • What exactly is unclear? Do you know what the payoffs of a call and put option are?
    – AKdemy
    Feb 20 at 18:35
  • It doesn't sound like you know what puts and calls are. Google them and you'll have the answer.
    – Carey Gregory
    Feb 21 at 20:41

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