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About Put Call Parity and Intrinsic Value
Another
important concept is the Intrinsic Value of
the option. The Intrinsic Value gives the current value
in terms
of the part of or number of points
an option is in
the money .
When
an option is expired and with no time value remaining it is said
to be
in parity. (see at the money)
Typically,
a profit graph is employed to help visualize potential scenarios, projecting results at differenet times and at expiration.
The profit zone or profit range is the range in which a profit may be
made, based on break-even points (represented as an upward region
for the Call buyer and a downward region for
the buyer of the Put)
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