Write the Mathematical Formula for Put-Call Parity.
The put-call parity formula for European options is: C + K e^-rT = P + S. Where C is the call price, P is the put price, S is the underlying asset price, K is the strike price, e^-rT is the present value factor (discounting the strike price by the risk-free rate r over time T). This formula shows that a portfolio of a long call and a short put equals a long position in the underlying asset and a short position in a zero-coupon bond.
Glossar
Underlying Asset
Futures Pricing incorporates the cost of carry, which in crypto markets includes funding rates derived from perpetual swap markets and the time value associated with holding the spot asset.
Mathematical Formula
Pricing ⎊ Mathematical formulas are fundamental to the valuation of financial derivatives and the operation of decentralized protocols.
Put-Call Parity
Relationship ⎊ Put-call parity describes a fundamental relationship between the price of a European call option, a European put option, and the underlying asset price, assuming they share the same strike price and expiration date.
Parity
Equivalence ⎊ ⎊ Parity, within financial markets, fundamentally represents a state of equality between two or more assets, rates, or pricing models, often serving as a benchmark for arbitrage opportunities or risk-neutral valuation.