Put-Call Parity in Options Trading Explained Using Excel

[@RyanOConnellCFA]

💾 Purchase the file created in this video here: ryanoconnellfinance.com/product/black-scholes-put-call-parity-calculator/ 🎓 Tutor With Me: 1-On-1 Video Call Sessions Available ► Join me for personalized finance tutoring tailored to your goals: ryanoconnellfinance.com/finance-tutoring/

[@deepanshugarg1497]

Most underrated channel on youtube deserves at least 500k minimum

[@RyanOConnellCFA]

Thank you, I really appreciate it! I think the topics I cover may be too niche to ever gather that many people but hopefully one day 😂

[@deepanshugarg1497]

@@RyanOConnellCFA Check Indian youtubers delivering the same type of content quality is 10 times lower than yours , already crossed 1M I think you should focus more on increasing the reach of Channel somehow ..

[@RyanOConnellCFA]

@@deepanshugarg1497 Very interesting! Do you know the channel name? Are the videos in English or Hindi?

[@deepanshugarg1497]

@@RyanOConnellCFA Booming bulls , Sanjay saraf educational institute , Rachna ranade and many more .... They all are English channels more or less and english is not that of an issue for Indians and especially your words are easily understandable because of there coherence.

[@weeeek1933]

This channel is golden lol, just discovered you will your videos on markowitz's portffolio frontier and this stuff on derivaties is great, thanks man

[@RyanOConnellCFA]

Welcome aboard! I'm glad to hear you enjoyed them, it's my pleasure

[@kaibaing4288]

Thanks man I was struggling with this for 2 hours

[@fahadalgaeed8478]

Best channel on youtub

[@RyanOConnellCFA]

Thank you man, this may be the best feedback I've gotten

[@GOjoe1970]

Love the content you put out. I was wondering if you would possibly do one on the Bjerksund-Stensland Option Pricing Model? Very interested in how that would be performed on Excel.

[@RyanOConnellCFA]

Thanks for the suggestion and I can look into this topic in the future!

[@tsunningwah3471]

you video is awesome cuz my professor keep using algebra instead of real number which is easier to conceptualise

[@RyanOConnellCFA]

Thank you! Sometimes real world examples really help to get a concept down

[@syetolognasyete3423]

Thank you from Russia!

[@RyanOConnellCFA]

Thank you too!

[@tsunningwah3471]

good! comment before watching

[@RyanOConnellCFA]

Hope you enjoyed it!

[@pablomoure2963]

Howdy man ¡ Would you considered making a video regarding the SBM (FRTB SA) ? I think it would be quite interesting if you could explain how to calculate delta vega and curvature of the trading book. Thank you in advance

[@RyanOConnellCFA]

Hey Pablo, I can look into this topic in the future!

[@tsunningwah3471]

come back to revise for my final next month!

[@RyanOConnellCFA]

Good luck on the test!

[@dantepreston5217]

Why did you calculate the PV of the Strike Price that way? Why not use the traditional way of calculating the PV in excel?

[@joelcollard2151]

Awesome video. One questions, in the second half of the video, why do you use the strike price to calculate the cash payoff instead of the discounted strike price? This deviates from the original put call parity formula so I did not follow this. Thanks in advance.

[@petersignore9547]

In this scenario, since the calls value is more than the put, if you were to long Port A and short Port B there is theta decay risk, not zero risk.

[@SanjibRay-o3g]

is it true ? can you explain

[@Sit-bc9uw]

Hi Ryan, please help me out. I still do not understand the arbitrage. You said to sell Port B and purchase Port A. You shorted the stock and sold a put therefore gaining $42.22. However, at 8:10 the payoff of the stock price is as if you were long the stock? It doesn't seem like a short selling model. If you had shorted the stock at $40, wouldn't the payoff be a loss of $5 if the price goes to $45? I take shorting here to mean short selling a stock you do not have.

[@rojarani-sh3yl]

@ryan how we can enter 1 week expiration time

[@RyanOConnellCFA]

For time (t) you can enter =7/365 7 being the number of days in a week and 365 being the number of days in a year

[@tsunningwah3471]

hi sir！ my professor said the Ke^-rt is a future. But it is a bond in this video. I am confused..

[@RyanOConnellCFA]

K*e^-rt is just a zero coupon bond discounted at the risk free rate (r) for a certain amount of time (t), where K is equal to the notional value of the bond. It assumes continuous compounding of interest (that is where e comes in)

[@tsunningwah3471]

@@RyanOConnellCFA thanks ryan!

[@RyanOConnellCFA]

@@tsunningwah3471 My pleasure!

[@victoricus1]

hello! but in reality, does this mispricing ever occur? and how often?

[@RyanOConnellCFA]

Any mispricing like this shouldn't exist for more than a fraction of a second before high frequency traders secure the arbitrage and force put-call pricing back into parity

[@bp56789]

I'm not an expert, but I imagine it will occur whenever someone does a price-changing purchase without a corresponding parity purchase on the other side (i.e. inefficient execution of purchasing a particular risk exposure).

[@victoricus1]

@@RyanOConnellCFA thank you! so, it's a purely theoretical thingy used to derive call price from put price and vice versa?

[@victoricus1]

@@bp56789 cheers matey

[@RyanOConnellCFA]

@@victoricus1 It is both theoretical and practical I'd say. Put-call parity isn't used to determine the price of calls and puts, (that would be option pricing models like Black Scholes and Binomial Option Pricing Model). It is more so used to point out a relationship that must hold true or arbitrage profits can be earned immediately