Put-call parity | Finance & Capital Markets | Khan Academy

Put-Call Parity. Created by Sal Khan.

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Finance and capital markets on Khan Academy: Options allow investors and speculators to hedge downside (or upside). It allows them to trade on a belief that prices will change a lot--just not clear about direction. It allows them to benefit in any market (with leverage) if they speculate correctly. This tutorial walks through option basics and even goes into some fairly sophisticated option mechanics.

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[PRAIRIEGHST]

It's insane how clear this video is compared to other resources. wow.

[ninglu]

I was trying to understand this concept. This video explains it the best among the ones I have watched.

[peabrane]

This is actually the best explanation of put-call I've seen on YouTube. Not sure why the downvotes

[nutrisoyboy]

Ya'll are missing the point. Put-call parity is a concept that, as it's name suggests, RELATES the price of the put to the price of a call on the same asset with same strike price and expiration date.

We are basically trying to build 2 separate portfolios-one with a put and the other a call-that have exactly the same payoff. Once we've done that, the two must then have the same cost for there not to be arbitrage.

[aravindnarayanan]

Understood this concept. Many thanks, sir!

[Betititito]

This is so clear! Thanks my man!

I tried learning it by reading but I couldn’t truly grasp it but this really made me get it.

Fiduciary call = protective put

[Scinery]

Sal, I can't follow this video and a lot of the newer videos because your mouse has become invisible!

[simonclasse]

it's reallt helpful to have a diagram with P/L. This finally makes sense to me. Thanks !

[SmilingassasinandD]

I went from questioning myself if I was dumb to well duh”

[etiennesimoneau]

Isn’t the stock + putt the same payout as juste a call option ?

[abhishekjaisinghiitr]

Literally the best explanation out there! 😄

[allleon]

This is my understanding based on other info I found on the web, correct me if I am wrong.
The original version of put-call parity does include the bond. This video is assuming we do not get any return from the bond. This is just the same as holding cash.
It is possible that we get interest from the bond (like in reality), just that things become much more complicated so the video just assumed a no-return bond for simplicity. The underlying concept is the same.

[TheZachary]

@decide
I agree i don't understand this strategy as well. rather than having the money tied up in bonds isnt it just better to buy the call option? Its not going to be exercised below the strike price anyway

[yushenong]

need a video on Put-Call-Forwards Parity tyty

[markzhang]

its really so difficult to understand this, I think you should use more chapter to give us more detail why

[markzhang]

Hi, man, I got a question, why the bound just worth $50? if it worth $60 it will not equal??please answer me soon, thank you.

[ferdy.prismriver]

Really good explanation.. your videos really helping me prepare my CFA Exam.. Its very beginner friendly, which comes from my point of view as bachelor in food tech.. 😭

When i'm desperate of the concept I often come looking to this channel.. 🤣

Notes : with this voice, you could as well become voice actors.. lol

From what I can see on the Graphic ON THE RIGHT, the "Stock + Put" combination would be the same as simply buying a "Call Option" (in which I would lose 10$ below the 50$ price, for not exercising the option, and make profit starting at the price of 60$).

Why does he focuses on the left graphic if the RIGHT ONE is the one who tells me what I would really get out of an investment??

[F]

I still don't get you. You're buying each of those or are you writing/selling some?

[alejandromorcilloalegre]

Do someone know some example in real life (with a company) that uses this?