Put Call Parity

In the Options world, everything is mathematical.

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The Put Call parity relationship between Calls and Puts is one such characteristic. Broadly defined, it means that there is a mathematical relationship between the price of a Call Option and the corresponding Put Option at that strike price. Many times this mathematical relationship gets broken to create Arbitrage opportunities, but the big players immediately spot this and move in to exploit the arbitrage opportunities, so they tend to vanish quickly.

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