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:



{{{ 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