synthetic-positions-put-call-parity

Put-call parity diagnostics detect options mispricing by calculating parity residuals after accounting for fees, dividends, and financing costs to identify discrepancies between theoretical parity values and actual market prices.

Synthetic positions for options replication are constructed by combining underlying assets, calls, puts, and financing legs to create equivalent payoff structures, requiring deterministic calculations and production guardrails for contract specifications, carry assumptions, and financing conventions.

Hedge equivalence verification is supported across an options portfolio by monitoring deviations from put-call parity to flag arbitrage opportunities or hedging inefficiencies using deterministic parity residuals.

Put-call parity validation works with custom contract specifications, carry assumptions, and financing conventions by applying deterministic calculations and production guardrails to ensure accurate parity checks and mispricing detection.

Limitations of synthetic positions for arbitrage detection include reliance on accurate inputs for fees, dividends, and financing costs; parity residuals may reflect market frictions or delayed data rather than true executable arbitrage opportunities.