The equation states:
It is important to use the forward value of the stock, which is adjusted for interest rates and dividends, rather than strictly the current price of the stock. We can calculate the forward value this way:
In a low rate environment, the forward value of a stock that pays no dividends is roughly equal to the current value. If interest rates are high, or a stock is hard to borrow, or the stock pays a dividend during the life of the option, the forward value may differ meaningfully from the current stock price.
This shows that the value of a call is the same as being short the stock and long a put. You will notice that those payoff graphs look quite similar. As you go through the study guide, keep this equation in mind when you see other similar looking graphs. If we structure the equation this way, we see that a long call and short put with the same strike and expiration creates a synthetic future:
As we saw above, the difference between the forward value and the current value of a stock is a function of interest rates and dividends. Because options prices are based on the forward value of the underlying product, it is crucial that options investors consider the effect of dividends and interest rates when implementing their strategies.
(IBKR, 2023, UNDERSTANDING PUT-CALL PARITY, https://ibkrcampus.com/trading-lessons/understanding-put-call-parity-2/ )