Explanation of Put-Call-Forward Parity: It is also known as PCFP. It is the theory that explains a connection between a put option and a call option where the cost has been set up by the help of forward market. Believing that every option has the similar strike cost and expiry date, if both the choices are “at the currency”, the value of call option in a single currency should be equal to the value of put option in another currency. Put call forwards parity differs from the associated expression known as Purchasing Power Parity. This states that the cost of a product in a country should equalize the cost of the product in some other country after the overseas exchange rate has been applied to it. The Big Mac index of the MacDonald’s is a famous measure of the reduction of PPP. It compares the existing costs for the hamburgers in different countries. In July, a Big Mac continues for nearly $3.73 in U.S but costs you nearly $4.33 in Europe.