# Replication

*Quant & Pricing — Finicade finance glossary*

Building a portfolio of simpler assets that exactly reproduces a derivative's payoff. If you can replicate it, no-arbitrage says the derivative must cost the same as the replicating portfolio — that's how its price is pinned down.

**Related terms:** [No-Arbitrage](https://finicade.com/glossary/no-arbitrage), [Risk-Neutral Pricing](https://finicade.com/glossary/risk-neutral-pricing), [Delta Hedging](https://finicade.com/glossary/delta-hedging)

**Taught in:** Hull Street — Put–Call Parity, Derived

Source: https://finicade.com/glossary/replication