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

Put-Call Parity. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/derivative-securities/put-call-options/v/long-straddle?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/derivative-securities/put-call-options/v/put-as-insurance?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets 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. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Comments

1. Do someone know some example in real life (with a company) that uses this?
2. 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.
3. Hi,man, I got a question, why the bound just worth $50? if it worth $60 it will not equal??please answer me soon, thank you.
4. its really so difficult to understand this, I think you should use more chapter to give us more detail why s+p=c+b???????
5. From what I can see on the Graphic ON THE RIGHT, the "Stock + Put" combination would be the same as simply buying a "Call Option" (in which I would lose 10$ 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??
6. 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.
7. Sal, I can't follow this video and a lot of the newer videos because your mouse has become invisible!
8. @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