( ) By combining a short position in a European call and a long position in a European put, we can create an option position that has the same profit and loss pattern at expiration as does the underlying stock. ( ) Portfolio insurance is an investment technique designed to protect a stock portfolio from severe increases in value. In essence, portfolio insurance with options involves holding a stock portfolio and selling a put option on the portfolio. ( ) A covered call transaction is undertaken as an income enhancement. technique. In a covered call transaction, a trader is generally assumed to already own a stock and sells a call option on the underlying stock. ( ) A straddle consists of a call and a put with the same exercise price and the same expiration. The buyer of a straddle buys the call and put, while the seller of a straddle sells the same two options