Put-Call Parity: Applies to derivative products. Option pricing principle that says, given a stock's price, a put and call of the same class must have a static price relationship because arbitrage opportunities or activities will always reestablish such a relationship.

 

Related Words

Put-Call Parity: Applies to derivative products. Option pricing principle that says, given a stock's price, a put and call of the same class must have a static price relationship because arbitrage opportunit . . . View Full Definition

Purchasing Power Parity: The notion that the ratio between domestic and foreign price levels should equal the equilibrium exchange rate between domestic and foreign currencies.

Parity Ratio: The ratio of the prices received index, 1910-14=100, to the prices paid index on a 1910-14=100 base (called the parity index). The parity ratio is a measure of relative price relationships. . . . View Full Definition

Parity Value: Related: Conversion value

Put-Call Parity Relationship: The relationship between the price of a put and the price of a call on the same underlying security with the same expiration date, which prevents arbitrage opportunities. Holding the underly . . . View Full Definition

Spot Futures Parity Theorem: Exchange rate on currency for immediate delivery. Related: Forward exchange rate.

Relative Purchasing Power Parity (RPPP): Idea that the rate of change in the price level of commodities in one country relative to the price level in another determines the rate of change of the exchange rate between the two countr . . . View Full Definition

Put-Call Ratio: Since investors buy put options when they expect the market to fall, and call options when they expect the market to rise, the relationship of puts to calls, called the put-call ratio, gives . . . View Full Definition

Parity Price: A measurement of the purchasing power of a unit of a particular commodity. Originally, parity was the price per bushel, bale, pound, or hundredweight that would be necessary for a unit of a . . . View Full Definition

Parity: An error-checking method that utilizes an extra bit that is sent to the receiving device to determine the validity of any given character.