Put-Call Parity
Arbitrage relationship between puts and calls
Positions in Chart: Own NIFTY + Buy 1 lot of 25800 PE + Sell 1 lot of 25800 CE. Spot price: 25800
Setup
Long Stock + Long Put + Short Call
When to Use
- Arbitrage when options are mispriced
Market Outlook
Volatility Expectation→Expected to Remain Stable
Price Direction→Expected to Stay Flat
Risk & Reward
Breakeven PointStock Price + Net Premium
Max Contract LossNet Premium Paid
Max Position LossSame as Max Contract Loss
Strategy Details
Complexity LevelIntermediate
DirectionNeutral - Not much move
VolatilityNeutral
Number of Legs3 Leg
Strategy TypeDebit
Hedging CapabilityHeavily Hedged
Description
Put-call parity shows the relationship between puts and calls
Example
If NIFTY is at ₹25,800, buying stock, buying a put, and selling a call at the same strike should have zero net exposure if properly priced.
This information is for educational purposes only and should not be considered as financial advice. Always consult with a qualified financial advisor before making investment decisions. Data is constructed and is not actual. Calculations may have errors.
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