Put-Call Parity is a fundamental concept in options pricing theory that establishes a
relationship between the prices of call options and put options with the same underlying asset,
strike price, and expiration date. It is based on the principle that the value of a call option plus
the present value of the strike price equals the value of a put option plus the current price of the
underlying asset.
The put-call parity equation can be expressed as follows:
C + PV(K) = P +
S