An investor executed an arbitrage trade three month ago by selling a protective put and buying a fiduciary call. At expiration, the stock price was below the same strike price of the call and put options involved in the trade.
At expiration, to close out all positions, the investor will:
A receive a bond payoff, buy stock via the call option, and deliver the stock to settle a short stock position.
B receive a bond payoff, buy stock via the put option, and deliver the stock to settle a short stock position.
C sell stock via the call option, and then take proceeds from stock sale to pay off the risk-free loan.
D sell stock via the put option, and then take proceeds from stock sale to pay off the risk-free loan.