Put-call parity

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 relationship.
References in periodicals archive ?
The other alternative methods that test the efficiency of the options market are pure arbitrage test' (Jensen 1978), which includes test of lower boundary condition and put-call parity conditions.
Misra and Sangeeta (2005) examined the violations on the basis of put-call parity relationship for S&P CNX Nifty index options traded on NSE.
A demonstrates, the put-call parity shows that the current-law taxation of options is internally inconsistent.
Put-call parity relates the value of the stock and options given any strike price (K) and time to exercise of the option (T) as follows:
To calculate the value of the extended warranty, the Black-Scholes model and the Put-Call Parity equation are used.
The Black-Scholes option pricing model and put-call parity provided the valuation framework.
Ofek, Richardson, and Whitelaw empirically investigate the well-known put-call parity no-arbitrage relation in the presence of short sale restrictions.
Although the empirical evidence generally supports some pricing relationships like put-call parity for individual stock options, significant mispricing has been reported in stock index options markets.
In the world of finance, this theory is illustrated by the Put-Call Parity Theorem, in which the value of the call option is equal to the value of the put option plus the cost of interest on the funds used to buy the stock.
A generalized pattern for the relationship between risky assets, riskless assets, and options is conveyed by the put-call parity relationship (for a compact derivation see Cox and Rubinstein, pp.
This relationship is sometimes referred to as put-call parity.
Information on spreads, put-call parity and synthetic options, trading volatility, and advanced option trading is also included