In the picture below you can see a fundamental relation between a call and a put:

<<image /static/files/MBI/Module%2013/fundamentaloptionrelation.png width:800>>

{{{
Buying share + Buying a put = Depositing the prevent value of the exercise price in the bank + Buying a call
}}}

In human language this means that:
* Buying a call and saving the money of the exercise price
Is the same as
* Buying a put and buying the share

Other forms of this relationship are:
{{{
Value of the put = Value of the call + Present value of exercise price - share price
}}}

Buying a put is identical to:
* Buy a call
* Invest present value of exercise price in safe asset
* Sell share
bag
finance_public
created
Sat, 14 Jan 2012 18:51:37 GMT
creator
dirkjan
modified
Sat, 14 Jan 2012 18:51:37 GMT
modifier
dirkjan
tags
M13
Principles of Corporate Finance
Term
model
creator
dirkjan