Put Call Parity Calculator

Test prices against parity using dividend assumptions. Reveal fair calls, puts, rates, and discount impacts. Use smarter checks before placing complex options positions today.

Calculator inputs

This tool is designed for European-style options. It compares observed prices with parity-based fair values and highlights possible mispricing.

Example data table

Spot Strike Years Rate Dividend Yield Call Put Fair Call Fair Put Gap
$100.00 $100.00 0.50 5.00% 2.00% $6.10 $4.60 $6.08 $4.62 $0.02
$120.00 $115.00 0.75 4.20% 0.00% $12.70 $4.20 $13.09 $3.81 -$0.39

Formula used

1) No dividends

C - P = S - K × e^(-rT)

2) Continuous dividend yield

C - P = S × e^(-qT) - K × e^(-rT)

3) Discrete dividends entered as present value

C - P = (S - PV(Dividends)) - K × e^(-rT)

4) Rearranged fair value formulas

Fair Call = P + Adjusted Spot - PV(Strike) Fair Put = C - Adjusted Spot + PV(Strike)

Here, C is the call price, P is the put price, S is the spot price, K is the strike, r is the risk-free rate, q is continuous dividend yield, and T is time to expiry in years.

How to use this calculator

  1. Enter the current stock price and the option strike.
  2. Enter time to expiry in years, such as 0.25 or 0.50.
  3. Provide the annual risk-free rate as a percentage.
  4. Enter current market prices for the call and put.
  5. Select how dividends should be treated for parity.
  6. Optional: add contract size and number of contracts for position-level gap analysis.
  7. Click Calculate Parity to display results above the form.
  8. Review fair call, fair put, parity gap, forward values, and the graph.
  9. Use the CSV and PDF buttons to save the report.

Frequently asked questions

1) What does put-call parity measure?

It links European call prices, put prices, spot price, strike, rates, and dividends. When market prices drift from parity, a relative mispricing may exist.

2) Why is this calculator focused on European options?

Classic parity holds cleanly for European contracts because they cannot be exercised early. American options may deviate because early exercise changes value relationships.

3) How should I handle dividends?

Use continuous yield for index-style assumptions or stable yield estimates. Use discrete present value when known dividend payments are expected before expiration.

4) What is the parity gap?

The parity gap is the difference between observed option spread and theoretical spread. A value near zero suggests consistent pricing under the selected assumptions.

5) What does fair call or fair put mean?

Fair call is the parity-implied call price based on the put and carry inputs. Fair put is the parity-implied put price based on the call and carry inputs.

6) Does a nonzero gap guarantee risk-free arbitrage?

No. Bid-ask spreads, short-sale limits, borrowing costs, taxes, and execution delays can remove or shrink a theoretical arbitrage edge.

7) What is implied forward price?

It is the forward price suggested by observed call and put prices. Comparing it with the carry-based forward helps reveal whether options imply a different market view.

8) Can I use this for strategy screening?

Yes. It works well for scanning option chains, checking synthetic exposures, and testing whether quoted calls and puts align with the underlying and financing inputs.

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Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.