Put Call Parity

Put Call Parity
   Put call parity is a fundamental relationship that must exist between the prices of a put option and a call option on the same underlying instrument with the same strike price and expiration date. If they are not the same then there is room for arbitrage. Put call parity applies to European-style options which can be exercised only on expiry and not before. American-style options can be exercised at any time during the life of the contract.
   ► See also Option, Arbitrage.

Financial and business terms. 2012.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • Put–call parity — In financial mathematics, put call parity defines a relationship between the price of a call option and a put option both with the identical strike price and expiry. To derive the put call parity relationship, the assumption is that the options… …   Wikipedia

  • Put-Call Parity — A principle referring to the static price relationship, given a stock s price, between the prices of European put and call options of the same class (i.e. same underlying, strike price and expiration date). This relationship is shown from the… …   Investment dictionary

  • put/call parity — The term used to describe the relationship between option and futures prices. By definition the prices of options and futures on the same underlying product must be linked due to the ability to synthetically create futures positions with the use… …   Financial and business terms

  • put-call parity — Applies to derivative products. option pricing principle that says, given a stock s price, a put and call of the same class must have a static price relationship because arbitrage opportunities or activities will always reestablish such a… …   Financial and business terms

  • Put-call parity relationship — The relationship between the price of a put and the price of a call on the same underlying security with the same expiration date, which prevents arbitrage opportunities. Holding the stock and buying a put will deliver the exact payoff as buying… …   Financial and business terms

  • put-call parity relationship — The relationship between the price of a put and the price of a call on the same underlying security with the same expiration date, which prevents arbitrage opportunities. holding the underlying stock and buying a put will deliver the exact payoff …   Financial and business terms

  • Parité Put-Call — La parité put call (Put Call Parity) définit une relation entre le prix d un call (option d achat) et celui d un put (option de vente), qui ont tous deux le même prix d exercice et la même échéance. La formule suppose que les options ne sont pas… …   Wikipédia en Français

  • Parity — is a concept of equality of status or functional equivalence. It has several different specific definitions.* Parity (physics), the name of the symmetry of interactions under spatial inversion * Parity (mathematics) indicates whether a number is… …   Wikipedia

  • Call option — This article is about financial options. For call options in general, see Option (law). A call option, often simply labeled a call , is a financial contract between two parties, the buyer and the seller of this type of option.[1] The buyer of the …   Wikipedia

  • Covered call — Payoffs and profits from buying stock and writing a call. A covered call is a financial market transaction in which the seller of call options owns the corresponding amount of the underlying instrument, such as shares of a stock or other… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”