Thus, a portfolio consisting of a stock plus a European put option (with strike price SP) is equivalent to a pure discount default-free bond (with fac
{"Image DocumentName": "The Put-Call Parity Pricing Relationship: Common Stock", "Image ImageDescription": "Thus, a portfolio consisting of a stock plus a European put option (with strike price SP) is equivalent to a pure discount default-free bond (with face value SP) plus a European call option (with strike price SP). So, by the Law of One Price, they must have the same price. The following equation expresses the pricing relation: The equation is known as the put-call parity relationship. The relationship allows one to determine the price of any one of the four securities from the values of the other three.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}