"Islam's prohibition on paying interest has made it difficult for many Muslims living in the West to purchase homes. As a result, that prohibition has spurred some innovative home financing techniques using put-call parity. In one of the simplest of these transactions, the bank buys the house and sells it to its client for a higher price through an installment sale. Thus, instead of owning the house and taking out a mortgage, which would be written as S(t) - K*e^-r(T-t), the client has agreed to buy the house, which can be written as C(t) - P(t). Viewed from the bank’ s perspective, it owns the house subject to the agreement to sell it to its client. Thus, the bank’ s position can be written as S(t) + P(t) - C(t), which from put-call parity is equivalent to K*e^-r(T-t), a simple loan."

More interesting stuff here (pdf). Knoll concludes: Recent years has seen an explosion of financial innovation. Much of this innovation seeks to exploit inconsistencies in the regulatory environment, and one of the most popular techniques for doing so uses put-call parity. Nonetheless, regulatory arbitrage using put-call parity is not a new phenomenon, as is frequently suggested. It occurred in ancient Israel to evade the prohibition on charging interest. It also occurred in Medieval England, where it led to the development of the modern mortgage. And it is occurring today as Muslims in the West use mortgage substitutes to purchase homes. In addition, put-call parity is also being used today to try to evade the equity of redemption, the defining characteristic of the real estate mortgage, and statutory mortgagor protections.

related items:
Nontraditional Instruments, Mahalanobis