all options are European.

A protective put strategy involves buying both a put option on a stock and the underlying stock itself.

1) Draw a payoff diagram, not a profit and loss diagram for a protective put strategy.

Label all the relevant parts of the diagram. and why do you think this strategy has its name?

2) Using put-call parity, why the payoff of a protective put resembles the shape of the payoff of a call option? Explain