UK Accounting Glossary
Put/Call Parity is 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 fact that combinations of options can create positions that are the same as holding the stock itself. These option and stock positions must all have the same return or an arbitrage opportunity would be available to traders.
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This glossary post was last updated: 23rd March 2020.