30*. The Put-Call Parity Relationship

Calls Cost More Than Puts

It is easy to verify that calls are actually more expensive than puts by making the following observation: Find a stock whose price coincides with a strike price. Then check the prices of the call and put options associated with that same strike price and which have the same expiration month. You might guess that these options would have the same price, but instead you would find that the price of the call is always greater than that of the put. The difference would be small in the front-month options, but becomes significantly larger as you go out to more distant expiration dates. The most pronounced difference in price is seen in the LEAPS options.

This price difference between ...

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