Option reversals (also reverse conversion)

A type of arbitrage which maintains (and relies on) put-call parity. If a put is overvalued (or if the put is fairly valued but the call is undervalued), a riskless profit can be made by selling the put, buying the call, and selling the underlying instrument or the future. The actual arbitrage return depends on the additional borrowing costs/investment returns from the money market transactions which fund/result from these trades.