Put Call Parity- Formula, Equation, Arbitrage,Theorem

Financen31409 Jul, 2021Other

There exists a connection between the European call options and the European put options prices, and this relationship is defined by the Put call parity. Though, the security, the strike price, and the ending month should be the same for the securities to establish the relation. Put call parity states that holding up of the long European call with the short European put simultaneously will yield out the same return when you will be holding up a forward contract having the identical basic asset, as well as the expiry date. And here the forward price will be equivalent to the option?s strike amount.