• C++ Programming for Financial Engineering
    Highly recommended by thousands of MFE students. Covers essential C++ topics with applications to financial engineering. Learn more Join!
    Python for Finance with Intro to Data Science
    Gain practical understanding of Python to read, understand, and write professional Python code for your first day on the job. Learn more Join!
    An Intuition-Based Options Primer for FE
    Ideal for entry level positions interviews and graduate studies, specializing in options trading arbitrage and options valuation models. Learn more Join!

Show that european call, put with same maturity and strike are equal iff strike=forward price

29226


The book defines put call parity as:
\( P(t)+S(t)-C(t) = Ke^{-r(T-t)} \)
where P(t) is value of the put, C(t) value of the call, S(t) is the value of the underlying asset, K is strike price.

In the proof, they substitute F (price of the forward) for the value of the asset. Why are they allowed to do this? Aren't the forward price and asset value different things?

Thanks!
 
Top