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