Parity definition

The term parity can be used in a few ways when trading, but always as an expression of equality.

The most common use of parity is in the forex market, where it signifies the point where two currencies have an equal value. That would mean that the exchange rate between the two currencies is exactly 1/1.

Parity can also be used in options, when an option’s value is equal to its intrinsic value, or on exchanges when multiple bids are identical and as such equal. 

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