Learn put/call parity with this free game

Yet another vibe-code project. This one went viral because…it’s a game!

It’s a replica of the one we trained on an eon ago at SIG. It’s a put-call parity game.

The formula for put/call parity is:

C = (S - K) + P + RC

where:

C = call value

P = put value

S = stock price

K = strike price

RC = cost of carry til expiry (ie “reversal/conversion” value)

In the game you are given the strike price and 3 out of 4 of the remaining variables. Solve for the 4th. The game is timed.

Try it for yourself:

🕹️Put-Call Parity Trading Game

Contextualizing the formula

You don’t want to just raw-dog the formula. You get faster if you can contextualize it because with practice your mind collapses multiple operations into just one or two. You need to try it for ahwile to appreciate what I mean.

But let me give the context.

First, note that (S-K) is just “intrinsic value”. If positive, the call is in-the-money, if negative, the put is.
The extrinsic portion of the ITM [call/put] is the value of the OTM [put/call]
For calls, we add the rev/con (ie cost of carry) for puts we subtract it

Contextualizing the game

The game spread quickly when I shared the link on X. I even had some more recent alum of SIG and one from another MM tell me even in recent years they use a game like this in training.

When I started in 2000, this game was actually in fractions (“steenths”) but decimalization pilots were happening in my clerking months. Even though I started on fractions, I was doing decimals about halfway through assistant year. As clerks we were supposed to play this game when things were slow so you could be fast in mock-trading in class after work so you could actually get selected for the bootcamp (which alone got you a raise) and get on with a trading account.

Speedy mental math was more important back then. Different era obviously, but interesting that they still find use in it. I could speculate as to why but maybe someone reading this will give me the official reason. I would admit that even when I’d get a broker look at an outright option when I was at Parallax I’d automatically do the calc in my head to compare to the same strike option on the chain. Being facile with the calculation was also a requirement on the rare occasion that a broker asked for a synthetic (a topic I discussed in the art of paranoia as well).

It only took about 20 minutes of iteration to make the game with Claude. Which is not much longer than it takes me to play 🙁

editor