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Explain the Concept of ‘Put-Call Parity’ and How It Applies to European Options.

Put-call parity is a fundamental relationship stating that the price of a European call option and a European put option with the same strike and expiration, combined with the underlying asset and a risk-free bond, must be equal to prevent arbitrage. It is a no-arbitrage principle that links the prices of the two derivatives.

Explain the ‘Put-Call Parity’ Theorem
Which Type of Option (Call or Put) Is Generally More Affected by Theta?
What Is the ‘Put-Call Parity’ Theorem and Its Importance in Derivatives Pricing?
What Is the Risk of “Put-Call Parity” Being Violated in a Short Option Position?