Hi Steve,

Thx for your quick reaction! Really appreciated.

In both prooves presented in the core reading there is short selling.

Proof a): page 17 around the middle of the page where the reversed part is assumed and a contradiction is found by an investment strategy directly including short selling.

Proof b): the principle of no-arbitrage could not be used as presented. There are two portfolios

A: one long fwd contract (strike K, expiry time T);

B: borrowing Ke^(-rT) & buying one share.

How would you find an arbitrage without short-selling in case of an assumption K < S_0 * e^(rT) ?

Thx in advance,

Sándor