Put-Call Parity can be used to show:
A) how far in-the-money put options can get.
B) how far in-the-money call options can get.
C) the precise relationship between put and call prices given equal exercise prices and equal expiration dates.
D) that the value of a call option is always twice that of a put given equal exercise prices and equal expiration dates.
E) that the value of a call option is always half that of a put given equal exercise prices and equal expiration dates.

Question

Quizplus · Accepted Answer

Put-Call Parity establishes a specific theoretical relationship between the prices of European put and call options with the same strike price and expiration date. It does not dictate the value of a call being twice or half that of a put, nor does it directly indicate how far in-the-money an option can get.

Put-Call Parity Can Be Used to Show