Call price (C) minus Put price (P) equals Stock price (S) minus Strike price (K) multiplied by exponential decay factor (e^(-rT))
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put-call parity states: C - P = S - K·e^(-rT)
Call price (C) minus Put price (P) equals Stock price (S) minus Strike price (K) multiplied by exponential decay factor (e^(-rT))
Related concepts
the Black-Scholes formula prices
Black-Scholes formula: C = S*N(d1) - X*e^(-rT)*N(d2), P = X*e^(-rT)*N(-d2) - S*N(-d1)
Write the Black-Scholes formula for a European call option: C = S·N(d₁) - K·e^(-rT)·N(d₂)
C = S·N(d₁) - K·e^(-rT)·N(d₂)
Beta (finance)
Beta measures a stock's volatility relative to the market
Greeks (finance)
Greeks measure sensitivity of option prices to underlying parameters
Risk parity
Risk parity allocates based on risk contribution, not capital allocation
the Capital Asset Pricing Model (CAPM) says
CAPM formula: Expected return = Rf + β(Rm - Rf)
Educational content, not financial advice.
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