Categories: Formula

Put Call Parity Formula: An Essential for Forex Trading

Put-Call Parity is an equation that is used by forex traders to calculate the fair value of a currency option contract. It essentially states that the sum of the current value of long put and short call positions should equal the intrinsic value of the option less its time value. Put-Call Parity is important to forex traders because it allows them to accurately assign a fair value to a currency option and provides a powerful tool to help identify arbitrage opportunities.

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