Put-call parity (T3-34)

[my XLS is here trtl.bz/2IzY0ui] We can synthesize stock ownership with a synthetic forward plus cash: S(0) = (c-p) + K*exp(-rT). That's put-call parity! My memorization mnemonic is "call plus cash equals protective put:" c + K*exp(-rt) = p + S(0). Discuss this video here in our FRM forum: trtl.bz/2LNdIYg.

[@tsunningwah3471]

i love you man although i am a dude

[@pratheeshbnair4115]

Thx 4 video. One silly doubt.. (I am a beginer though) what does value of put/ call mean? Is it payoff because of those or initial premium of those? From video i can see parity it is working for both concepts. But i am confused bit.

[@mrhumble234]

The value of the put or call just means the price that someone is willing or should be willing to pay for that option. If the price were different based on the underlying parameters, there would be an arbitrage opportunity where you could either long the synthetic futures and short the futures or you can short the synthetic forward and long the forward for a riskless profit.

[@pratheeshbnair4115]

@@mrhumble234 thanknyou very much

[@EthelGwatipedza]

thank you

[@bmwman5]

Why is Put Call Parity important for American style options? Is it b'cos of arbitrage opportunities??

[@AdamRTNewman]

I believe that the call-put parity formula would need to be modified if the stock pays any dividends between the present time and the maturity of the options. If one buys the stock straight away at the ordinary stock price, then at time T the holder of the stock will have the stock + dividends that it has paid. On the other hand, if one obtains the stock at time T by having entered into and exercised the long forward, this person will not then have those dividends that the stock had paid up to time T.

[@ranjancom2000]

But how to get premium price is their any fixed value to match to enter. Or this will work on educational purpose only

[@arielferraina9646]

THANK YOU FOR THE VERY EASY WAY TO EXPLAIN THOSE TOPICS. IT'S REALLY GOOD !!!

[@kaiwang2924]

Thank you, your course is so easy to understand and memory.

[@katherineli3435]

awesome video! thx a lot!!

[@bionicturtle]

Thank you for watching!

[@primira3862]

Thanks a million. This video is a blessing!

[@qudizzle1]

you are a very very good teacher, thank you for sharing

[@exoticbirdsmerchant6702]

BRAVO! You are trully Bionic!!!

[@olivomiguel]

Great video!