Can some explain what it means - “Options-like payoff characteristics of many hedge funds…” Answer to Q8 CFA volume 5. TIA

Basically these returns do not follow a normal distribution - much like options, and **the relevant concept** they’re trying to explain is that since the returns are not normally distributed, standard deviation is a faulty measure for their volatility which thus makes the Sharpe Ratio not a useful measure in assessing risk.