Hey guys, can anyone pls explain in simple words why puts and calls delta and price differs??? Watching the option chain, shows calls (5 delta) @ 5 cents and puts (5 delta exactly) @ 11 cents. Why so much skew at exactly same delta?? I thought if the delta is same there prices should be same right???? I.e 10 delta calls and put prices should be similar no?? The distance from ATM straddle can differ but why the price mismatch at same delta??
Posted by Separate-Dealer3979
3 Comments
Bro u shouldn’t be anywhere near options
It is common for puts to be priced at a premium to calls for stocks and stock indexes. For commodity futures, the opposite is often true. More info here:
[https://www.optionseducation.org/news/volatility-skew-and-options-an-overview](https://www.optionseducation.org/news/volatility-skew-and-options-an-overview)
Short answer: Interest rates.
Long answer: Put-call parity recognizes the differences in carrying cost and opportunity cost between the two types of contracts, particularly when compared to equivalent trading of shares, short vs long, respectively. These differences are reflected in how the market values puts vs. calls.
More reading:
https://corporatefinanceinstitute.com/resources/derivatives/put-call-parity/
https://www.macroption.com/put-call-parity-formula/#american-options