Put call parity

Put call parity derives from the idea we can have two portfolios (one with an option, the other with a put) that have identical payoffs regardless of what happens to the stock. This gives a way to link the value of a call option with a put option.

Category:

Education

Tags:

• Finance
• Excel
• Derivatives
• Stock
• Options

[TheCasanova2012]

omg~ you save my life i have finace exam in 4 days i've been trying to get idea how this work by reading and doing some exam question relate to this but can't get clear view.. but now i am so THANK YOU SO MUCH TOU ARE HERO.

[bionicturtledotcom]

@TheCasanova2012 Thanks, I'm thrilled to help.

[bionicturtledotcom]

Fantastic, love to help!

[dharmishaaaa]

Probably the best explanation of put-call parity, after a whole few days of scratching my head whilst reading through my lectures, I know get this, bring on my exam on the 24th!

[bionicturtledotcom]

@dharmishaaaa thank you, i really appreciate that!

[chadobomber]

Scweser Level II has nothing on you, nice explanation

[bionicturtledotcom]

@chadobomber that is the nicest thing anybody said to me today. Thank you so much!

[pankajrajput7]

Great Job! keep it up...

[carocip]

Thank you sooooooo much! You saved my day!

[dajieda0]

I have a question: the premium which is the price of the call option is paid when the contract is signed. Is this price ($3) a present value or a future value ($3 one year later which is less than $3 today)? Thanks.

[TheSchola3000]

ok but the chances of being able to use a call options and put options with the same stock is a small percent chance isnt it?

[TheAlperino]

how do I get the dividend in this formula?