start from two simple, economically motivated axioms, namely absence of arbitrage (in the sense of NUPBR) and absence of … relative arbitrage among all buy-and-hold strategies (called static efficiency). A valuation process for a payoff is then … valuing by absence of arbitrage alone. We show that this always yields put-call parity, although put and call values …

price dynamics is identified. A necessary condition for our approach to be consistent with the arbitrage-free martingale …

equivalent to the absence of arbitrage. State prices, which can be obtained from optimizing investors' marginal rates of …