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+438 Part IV: Additional Considerations 
+Put price = Striking price + Call price - Stock price - Fixed cost 
+Furthermore, if the stock is at the striking price, the formula reduces to: 
+Put price = Call price - Fixed cost 
+So, whenever the fixed cost, which is equal to the carrying charge less the dividends, 
+is greater than zero (and it usually is), the put will sell for less than the call if a stock 
+is at the striking price. Only in the case of a large-dividend-paying stock, when the 
+fixed cost becomes negative (that is, it is not a cost, but a credit), does the reverse 
+hold true. This is supportive evidence for statements made earlier that at-the-money 
+calls sell for more than at-the-money puts, all other things being equal. The reader 
+can see quite clearly that it has nothing to do with supply and demand for the puts 
+and calls, a fallacy that is sometimes proffered. This same sort of analysis can be used 
+to prove the broader statement that calls have a greater time value premium than 
+puts do, except in the case of a large-dividend-paying stock. 
+One final word of advice should be offered to the public customer. He may 
+sometimes be able to find conversions or reversals, by using the simplistic formula, 
+that appear to have profit potentials that exceed commission costs. Such positions do 
+exist from time to time, but the rate of return to the public customer will almost 
+assuredly be less than the short-term cost of money. If it were not, arbitrageurs would 
+be onto the position very quickly. The public option trader may not actually be think­
+ing in terms of comparing the profit potential of a position with what he could get by 
+placing the money into a bank, but he must do so to convince himself that he cannot 
+feasibly attempt conversion or reversal arbitrages. 
+THE "INTEREST PLAY" 
+In the preceding discussion of reversal arbitrage, it is apparent that a substantial por­
+tion of the arbitrageur's profits may be due to the interest earned on the credit of the 
+position. Another type of position is used by many arbitrageurs to take advantage of 
+this interest earned. The arbitrageur sells the underlying stock short and simultane­
+ously buys an in-the-money call that is trading slightly over parity. The actual amount 
+over parity that the arbitrageur can afford to pay for the call is determined by the 
+interest that he will earn from his short sale and the dividend payout before expira­
+tion. He does not use a put in this type of position. In fact, this "interest play" strat­
+egy is merely a reversal arbitrage without the short put. This slight variation has a 
+residual benefit for the arbitrageur: If the underlying stock should drop dramatically 
+in price, he could make large profits because he is short the underlying stock. In any 
+case, he will make his interest credit less the amount of time value premium paid for 
+the call less any dividends lost.