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What is put-call parity, in plain words?

Put-call parity is the pricing link between a call and a put on the same stock with the same strike and expiry ¹. For a stock without dividends, the call's price equals the stock plus the put minus the strike discounted to today: c = S + p − K·e^(−rT) ¹. Knowing one price implies the other.

A call and a put with the same strike, 30 days left, 30% implied volatility, 4.3% interest (made-up numbers). Move the stock and the strike.

Source: the StrikePath engine, pricing with the Black–Scholes formula ² at 4.3% interest a year; a simulated example, not market prices. For learning; not advice.

In numbers

With the stock at $50, the $52 call costs $0.99 and the $52 put $2.80 by the formula ²: call minus put is −$1.81 in whole cents. The stock minus $52 discounted for 30 days ($51.82) is −$1.82 ¹: the same, but for a cent of rounding.

What moves the gap

Higher interest tends to raise calls and lower puts, and higher dividends do the opposite ¹. So, with no dividend and the strike at the stock's price ($50), the call costs a little more than the put: $1.80 against $1.63 by the formula ² ¹.

What this shows, and what it doesn't

The formula shown is for a stock without dividends ¹, priced as options exercised only at expiry; real quotes also carry bid-ask spreads.

Go further

What is a put option? →The right to sell.American and European options →When early exercise matters.

Sources (2), checked 20 October 2026 and 27 October 2026

The Options Industry Council, “Put/Call Parity”. Read it (read 27 October 2026)
Fischer Black and Myron Scholes, “The Pricing of Options and Corporate Liabilities”, Journal of Political Economy 81(3), 637–654, 1973. Read it (read 20 October 2026)

Now try it on a scenario of your own

Pick where a simulated stock might be, and by when: drag one dot and see, side by side, what buying shares, one option, or a pair of options (a call or put spread) would each do. Free, no sign-up.

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