Why At-the-Money Calls and Puts Can Have Different Premiums

By Options Matrix Pro Editorial Team | 25 October 2026

A fictional stock is worth $100. A one-year $100 call has a theoretical value of about $12.76, while the matching put is worth $8.00. Both options have zero intrinsic value at that stock price. The $4.76 difference can still be consistent with the same pricing framework.

A call and a put at the same strike and expiration can have different premiums even when the underlying price equals the strike. The explanation starts with when the money changes hands. Buying shares requires paying for them now; a call's exercise price is paid later if the holder exercises.

The example below isolates that financing difference. Every price and rate is invented. It explains a relationship between values, without identifying a real contract or a trading opportunity.

At the money describes the strike relationship

Moneyness compares the underlying price with the strike. At $100 for both, neither a $100 call nor a $100 put has intrinsic value. A positive premium therefore consists of time value in this example. Equal intrinsic values do not require equal total premiums.

The Options Industry Council's pricing guide includes interest rates and dividends among the inputs affecting an option's premium. Its put-call-parity explanation connects the prices of matching calls, puts and the underlying. Financing belongs in that comparison alongside the contracts.

For European options on a non-dividend-paying underlying, the textbook call-minus-put value equals the underlying price minus the present value of the strike, under frictionless no-arbitrage assumptions. European exercise means exercise is restricted to the contractual expiration exercise period. The CFA Institute's public introduction to put-call parity explicitly frames this relationship around European options and an underlying with no income or benefit.

Written per underlying unit, the relationship is:

Call value - put value = current underlying price - present value of strike

Present value means the amount needed today to reach a specified future payment at the assumed rate. Paying $100 a year from now has a different financing value from paying $100 today when that rate is positive.

A $100 payment needs only $95.24 today in the model

Assume fictional Alder shares cost USD100, both theoretical options have a USD100 strike, and exactly one year remains. They are European-style, with identical expiration, deliverable and settlement terms. Each assumed contract represents 100 shares. This is a classroom contract specification, not a claim that an actual U.S. stock-option listing has those exercise terms.

Assume no dividends, taxes, fees, bid-ask spreads, default, borrowing restrictions or other market frictions. Cash earns a certain 5% effective return over the year. That invented rate is neither a current market observation nor a broker's promised cash yield.

The amount required now to provide $100 at expiration is:

$100 / 1.05 = $95.238095...

The financing difference is:

$100 - $95.238095... = $4.761905... per share

If we set the put's theoretical value at $8.00 per share, parity requires a call value of $12.761905 under these assumptions. Rounded to cents, the values are $8.00 and $12.76. The formula establishes their difference; it does not independently calculate the $8.00 put value or either contract's probability of profit.

For the assumed 100-share units, the gap is about $476.19. It equals 5% of the $9,523.81 present-value cash amount. Multiplying the full $10,000 future strike payment by 5% would produce $500, which answers a different interest calculation.

With a zero rate and the other assumptions unchanged, the present value of the $100 strike would be $100 and the at-the-money call-minus-put difference would be zero. Positive financing in this example accounts for the unequal premiums.

Two portfolios explain the equality

Compare two hypothetical portfolios, each measured per share. The first owns the call plus enough cash to become $100 at expiration. The second owns one share plus the put. Neither portfolio sells an option.

Their initial values are equal before rounding:

Call plus cash: $12.761905... + $95.238095... = $108

Share plus put: $100 + $8 = $108

The following complete outcome records show their gross terminal values, before costs and without subtracting the initial investment:

• At an $80 expiration share price, the call is worth $0 and the cash is $100, making the first portfolio worth $100. The share is worth $80 and the put is worth $20, making the second portfolio worth $100.
• At a $100 expiration share price, the call and put are each worth $0. The first portfolio has $100 cash; the second has a $100 share. Both terminal values are $100.
• At a $125 expiration share price, the call is worth $25 and the cash is $100, making the first portfolio worth $125. The share is worth $125 and the put is worth $0, making the second portfolio worth $125.

Below the strike, both portfolios have a gross value of $100. Above it, both have the share's terminal value. Matching terminal values explain equal initial values under the model's assumptions. Subtracting the $108 initial value gives a simple, undiscounted dollar result of -$8, -$8 and +$17 for the three cases. That subtraction does not include an opportunity-cost benchmark.

The two options alone have different payoffs. A call benefits from prices above the strike; a put benefits from prices below it. Parity compares complete portfolios, including the share or cash needed to match their outcomes. OMP's earlier covered-call and cash-secured-put comparison uses a related identity to explain a different pair of expiration payoffs.

Dividends and early exercise change the comparison

A shareholder can receive dividends during the holding period. The call-plus-cash portfolio above receives none, so introducing dividends requires adjusting the comparison. OIC explains that higher expected dividends tend to lower call values and raise put values, with other inputs held constant. The size and timing of those expected payments matter. The positive-rate example does not establish that calls must always cost more than puts.

The exact equality also cannot be transferred unchanged to American-style options. Their early-exercise rights can change values and move a stock transaction ahead of the assumed final date. FINRA's options overview describes ordinary U.S. equity options as American-style and distinguishes them from European-style contracts. An adjusted deliverable, mismatched expiration or different settlement reference would require its own analysis.

If a comparison is turned into a position containing short options, assignment becomes a separate obligation. FINRA's assignment guide explains that a short equity call can require share delivery and a short equity put can require a share purchase. Holding another option does not automatically complete the required action. OMP's synthetic-long-stock example follows that funding problem explicitly.

Real quotes need more than a subtraction

Suppose a separate fictional quote screen shows a call at $12.50 bid and $13.00 ask, and a put at $7.80 bid and $8.20 ask. Their midpoints are $12.75 and $8.00, a $4.75 difference.

Using the displayed sides, buying the call at its ask and selling the put at its bid would cost $5.20 per share. Selling the call at its bid and buying the put at its ask would receive $4.30. Neither direction produces the midpoint difference. These are conditional quote-side calculations, not promised executions, a complete arbitrage test or proposed orders.

The OIC bid-and-ask guide describes how orders can execute, queue or remain exposed to slippage. A full pricing check also needs the underlying's quote, matching timestamps, available size, actual funding and borrowing terms, dividends, exercise rights and all transaction costs. A premium gap alone does not establish mispricing, an executable arbitrage or a suitable trade.

Four limits remain outside the pricing identity

Liquidity determines whether a position can be opened or closed near an analytical value. Wide spreads or unavailable size can defeat a comparison that appears attractive at midpoints. OMP's liquidity guide explains why a model value is not an exit commitment.

Concentration depends on the combined exposure across the portfolio. A relationship between two option prices says nothing about whether the underlying already dominates the investor's shares, funds or employment-linked assets.

Time horizon matters because an option has an expiration and cash needs may arrive earlier. The one-year equality does not establish an accessible account value on a date before expiration or justify tying up money needed for bills.

Funding suitability requires its own check of account approval, collateral, exercise payments, delivery and settlement procedures. An option buyer can lose the full premium; losses in resulting shares are a separate exposure. A short put can create substantial share-purchase losses, and an uncovered short call can lose without a fixed upper limit. Broker requirements, financing charges and jurisdiction-specific taxes can change the result.

For the next same-strike price comparison, record the exercise style, common expiration and settlement terms, then separate the financing and dividend assumptions from the actual bid and ask. If those inputs are missing, the premium gap remains unexplained rather than a basis for a transaction.

Sources and methodology

Primary sources were checked on 25 October 2026, Australia/Brisbane. The financing example, payoff records and quote-side calculations are author arithmetic from fictional assumptions. They are not live quotes, a forecast, a backtest or a calibrated option-pricing model.

• OIC: Put/Call Parity
• OIC: Options Pricing
• CFA Institute: Option Replication Using Put-Call Parity, public introduction
• FINRA: Options
• FINRA: Trading Options, Understanding Assignment
• OIC: Understanding the Bid and Ask Prices for Options

Options Matrix Pro publishes this article and has a commercial interest in its research platform. Internal links lead to first-party education. This is general education, not personal investment, legal or tax advice, and recommends no purchase, sale or holding. Options are not suitable for everyone. Obtain and read the current Characteristics and Risks of Standardized Options from your broker before trading, and confirm the contract and account rules. This article does not audit that disclosure document in full or provide a professional suitability assessment. See OMP's general disclaimer.