Difference between revisions of "Fundamental relation between call and put"

Latest revision as of 19:24, 27 August 2020

In the picture below you can see a fundamental relation between a call and a put:

{{{ Buying share + Buying a put = Depositing the prevent value of the exercise price in the bank + Buying a call }}}

In human language this means that:

Is the same as

Other forms of this relationship are: {{{ Value of the put = Value of the call + Present value of exercise price - share price }}}

Buying a put is identical to:

@@ Line 1: / Line 1: @@
-Fundamental relation between call and put
+In the picture below you can see a fundamental relation between a call and a put:
+<html><img src = "/static/files/MBI/Module%2013/fundamentaloptionrelation.png" width="800"/></html>
+{{{
+Buying share + Buying a put = Depositing the prevent value of the exercise price in the bank + Buying a call
+}}}
+In human language this means that:
+* Buying a call and saving the money of the exercise price
+Is the same as
+* Buying a put and buying the share
+Other forms of this relationship are:
+{{{
+Value of the put = Value of the call + Present value of exercise price - share price
+}}}
+Buying a put is identical to:
+* Buy a call
+* Invest present value of exercise price in safe asset
+* Sell share
 [[Category:finance]]