The relationship between the prices of the underlying stock

The relationship between the prices of the underlying stock, a call option, a put option, and a riskless asset is referred to as the _____ relationship.

Solution

The relationship between the prices of the underlying stock, a call option, a put option, and a riskless asset is referred to as the put - call parity relationship.

Put-call parity refers to the relationship between put and call options for a given security, strike price

and expiration date. Under put-call parity, the option prices should match, yielding no profit or loss.