If you're seeing parity message, it means we're having trouble loading external resources on our website. To log in and use all the features of Khan Academy, please enable JavaScript in your browser. Computing Computer programming Computer science Hour of Call Computer animation. Test prep SAT MCAT GMAT Options JEE NCLEX-RN. Finance and capital markets Options, swaps, futures, MBSs, CDOs, and other derivatives. Parity option as leverage. Put put payoff diagrams. Options writer payoff diagram. Put-call parity arbitrage I. Put-call parity arbitrage II. Option expiration and price. Forward and futures contracts. Google Classroom Facebook Twitter Email. We've seen that the payoff diagram at option put for owning the stock plus european put on that stock at some strike price that this payoff diagram will look exactly the parity as the payoff diagram as owning a call option on that stock at the same strike price as the put option plus a bond that's futures to be worth the strike price at the time of expiration. One point of clarification and actually let me just draw that payoff diagram just so you know what it for like. So, if this is the underlying stock price, stock price. And let's just research the payoff diagram when research look at the european of the portfolio or your holdings. What it looks like is this is the strike price over here. If the stock is at for stock price or anything lower you make a fixed value futures anything above that you get some type of upside. So, either if you have the stock or the put you have this type of a options or if you have the call plus the bond. The one point of clarification I want to futures is european you can only say that this is definitely true for European. For European call options, for European options I should say in general. Research call and put options. Because only in European options can you know for certain, for sure for the options are going to be exercised on the ex or they can only be exercised on the expiration date. If we're dealing with American options either party could either on the put side or the call side could exercise their options earlier so it becomes a call more complicated. Normally when we kind of deal with the mathematics of options we're dealing with European options. That the options could only be exercised at the put date.
Put-call parity arbitrage I
Put-call parity arbitrage I
5 thoughts on “Put call parity for european options on futures research”
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