Solution: Recovering the Put Price from Parity

Exercise: Recovering the Put Price from Parity

Solution

Put-call parity gives $C_0-P_0=S_0-Ke^{-rT}$, so

Takeaways

• The put price follows from the call price when strikes and maturities match.
• Parity is model-free once the call price is known.
• A Black-Scholes implementation should satisfy parity to numerical precision.