put-call parity


The relationship between the price of a call and the price of a put for an option with the same characteristics (strike price, expiration date, underlying). It is used in arbitrage theory. If different portfolios comprised of cals and puts have the same value at expiration, it is implied that they will have the same value leading up to the expiration point. Thus, the values of the portfolios move in lock step. Portfolio price equality is calculated as c + PV(x) = p + s, where c is the market value of the call, PV(x) is the present value of the strike price, p is the market value of the put, and s is the market value of the underlying security.
If the two sides of the equation are not equal, arbitrage profit could be gained by investing in the less expensive portfolio. Analysis of the parity relationship assumes that other factors, such as a dividend, are not taken into account.

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You should try and follow the put-call parity and see how you can make some profit off of it.

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There was some put-call parity and I thought it was really interesting and it had a lot of interesting things about it.

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Based on the put-call parity theory, they could hold the same positions in each and therefore the values would be the same at expiration.

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