Put-Call Parity Explained: The Present Value of the Strike
Summary
Hollow Point Trading shares a short explainer on put-call parity using a hypothetical European call and put with the same underlying, strike, and expiration. It shows why the relationship between premiums includes the present value of the strike, assuming no dividends, transaction costs, or borrowing restrictions.
https://youtu.be/jNESODAk0yo
Put-call parity includes the present value of the strike #Shorts
A call premium and a put premium are connected through more than their difference. Consider a hypothetical European call and put on the same underlying, with the same strike and expiration. Assume no dividends and an ideal market without transaction costs or borrowing restrictions. The stock costs one hundred dollars. The strike is one hundred d...
