Description
Compare call-put with spot-dividendPresentValue-strike×discountFactor and return the residual.
A financial model connects supplied rates, discount factors, cashflows or prices under a particular convention. A local identity or residual is not a complete valuation, an observed market relationship or a promise of future returns.
Compare call-put with spot-dividendPresentValue-strike×discountFactor and return the residual.
When to use this tool
Use Option Putcall Parity Residual when you need one transparent financial-model term.
How to use the tool and how it works
- Enter callPrice, putPrice, spot, strike, discountFactor, dividendPresentValue. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read left, right, residual. Use the output convention below.
Require nonnegative option/spot/strike/dividend-PV inputs and positive discount factor. Compare call-put with spot-dividendPresentValue-strike×discountFactor and return the residual.1
For matched European contracts, discrete-dividend parity subtracts the dividends’ present value and the discounted strike from spot. The same equality is not a general American-option rule.2
| Input field | Meaning and units | Accepted input |
|---|---|---|
| callPrice | Call Price | Required. Finite number; minimum 0. |
| putPrice | Put Price | Required. Finite number; minimum 0. |
| spot | Spot | Required. Finite number; minimum 0. |
| strike | Strike | Required. Finite number; minimum 0. |
| discountFactor | Discount Factor | Required. Finite number; strictly above 0. |
| dividendPresentValue | Dividend Present Value | Required. Finite number; minimum 0. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| left | Left | Required. Finite number. |
| right | Right | Required. Finite number. |
| residual | Residual | Required. Finite number. |
{
"input": {
"callPrice": 12,
"putPrice": 5,
"spot": 100,
"strike": 100,
"discountFactor": 0.95,
"dividendPresentValue": 2
},
"output": {
"left": 7,
"right": 3,
"residual": 4
}
}Limitations and assumptions
- This is European put-call parity for matched underlying, strike, expiry and compatible financing/dividend assumptions. It does not validate contracts, executable arbitrage, American options or trading costs.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Use a complete model matching the instrument, cashflows and market conventions. Review compounding, timing, currency, uncertainty and omitted costs before using a local estimate in a financial decision.
References
-
Calculation and input contract: financial-economics/option-putcall-parity-residual — tool.io
-
European put-call parity with discrete dividends — Society of Actuaries
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