Put Call Forward Parity for European Options
1. Context
In this video from FRM Part 1 & CFA Level 1 curriculum, we explore an alternative version of the Put Call parity which is called the Put Call Forward parity – a no-arbitrage relationship between European option prices (of same strike and maturity), forward / futures price and present value of strike. We recap the simple Put Call parity for the case of an underlying asset that doesn’t pay any income and then transition our way to the Put Call Forward parity. For more information about the FRM Part 1 preparation course, please visit the course page.
| Area | Financial Markets and Products |
| Reading | Properties of Options |
| Reference | Chapter 13, Properties of Options, GARP Official Books (Book 3, Quantitative Analysis). |