Put-call parity
Definition · Level 2 · Long options & hedges
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No-arbitrage link between European calls and puts with the same strike and expiry: C − P = S − PV(K), minus PV(dividends) on a dividend payer. It ties a same-strike call and put to one IV; if it breaks by more than costs, traders arbitrage it back.
Example
S 100, K 100, PV(K) 99 → the call should be about 1.00 over the put.
Where Tradecraft teaches it
Level 2 · Long options & hedges, in the lesson “Put-call parity and the conversion”: Calls, puts and stock are tied by one equation — and a conversion locks it in.
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