How Interest Rates and Dividends Shift Parity
Real examples showing how changing interest rate assumptions (4.32% vs 8.32%) create different forward prices even with identical strikes and stock prices. See how dividend timing affects call and put pricing.
0:15 Forward Pricing and Put-Call Parity
1:08 Using the OIC Options Calculator
1:55 Calculating Implied Forward Price
2:21 Implied Forward Above Strike Price
2:47 Recalculating with Higher Rate
2:58 Different Forward Price Results
3:11 Why Higher Rates Change Values
3:33 Interest Rates Affect Implied Forwards
4:23 Understanding Option Mispricing
Register to view the complete Pricing Models & Put-Call Parity: How Theory Shapes Option Values webinar: https://bit.ly/46spIFs.
Recommended Videos
Options FAQ: How do interest rates impact options?
Interest rates play a crucial role in options pricing, primarily through the risk-free rate, a key factor in models like Black-Scholes. But how exactly do rising or falling interest rates affect call and put options?
Watch Now
Dividend Considerations for Option Traders
Review possible ways dividend payments affect exercise decisions and the importance of becoming a shareholder before the ex-dividend date.
Watch Now
Corporate Actions: Cash Dividends
Cash dividends may seem straightforward—but their impact on options contracts is more complex. In this video, we explain how dividends influence options pricing, the role of models like Black-Scholes, and how OCC determines whether to adjust contracts.
Watch Now
The Dividend Effect
Tune in to learn about the effect that a stock's dividend can have on an option's price - and on your account.
Watch Now