Finance School of management The Put-Call Parity relation Two ways of creating a stock investment that is insured against downside price risk buying a share of stock and a put option (a protective- put strategy) Buying a pure discount bond with a face value equal to the options exercise price and simultaneously buying a call option uesTc8 Finance School of Management The Put-Call Parity Relation ❖ Two ways of creating a stock investment that is insured against downside price risk – Buying a share of stock and a put option (a protective￾put strategy) – Buying a pure discount bond with a face value equal to the option’s exercise price and simultaneously buying a call option