“Parity” is the point where an option is worth only what it’s worth if exercised — all possibility priced out, only reality left.
NoVo Options Trading ·
An option trades at parity when its price equals its intrinsic value — meaning it has no time value left. It’s typical of deep in-the-money options near expiration.
What it means
Normally an option’s price = intrinsic + extrinsic (time) value. At parity, the extrinsic value is ~zero, so the option is worth only its intrinsic value — the amount you’d capture by exercising. It moves point-for-point with the underlying (delta ~1.0), behaving like the stock itself.
When it happens
Parity occurs for deep ITM options near expiration — there’s little time left and the option is so far in the money that its value is essentially all intrinsic. It’s also relevant to early exercise decisions (a deep-ITM option at parity has no time value to give up, so exercising costs nothing extra) and put-call parity arbitrage.
At parity, an option is pure reality — worth only what it’d fetch if exercised now, with all the “maybe” priced out.
The takeaway
Parity = price equals intrinsic value (no time value), typical of deep-ITM options near expiration. It’s a niche but useful concept for understanding option pricing and exercise decisions. Not something a 0DTE scalper trades on directly, but part of full options literacy.
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NoVo is a software tool for market analysis, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.
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