Parity Price

What does it mean?
The term 'parity' refers to equality. Thus, parity price is a price for an asset that is directly linked to another price.

Examples:

1. Options parity - when an option is trading at its intrinsic value ("trading at parity").
2. International parity - official rates for a currency in terms of other pegging currency.
3. Futures trading parity - situation in which cash and futures contracts are selling at equivalent yields.
4. Listed parity - situation when all parties involved are of equal standing and priority.

In Other Words...

Commonly used in the context of convertible securities and often referred to as conversion parity price or market conversion price. A price an investor effectively pays to exchange or convert a convertible security into common stock and is equal to the price of the convertible security divided by the conversion ratio (the number of shares that the convertible can be converted into).  Conversely, in the case of common stock, it is calculated by dividing its market value by its conversion ratio. 

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