Corporate Finance (FIN 201) Options: Calls, Puts, Payoffs, and Put-Call Parity Practice Problems
New York University
Corporate Finance (FIN 201) | Practice Problems

Overview
A FIN 201 options practice packet for exam season: payoff and profit diagrams, moneyness, simple pricing logic, and put-call parity drills that show up on midterms and finals.

Key topics
•call vs put payoff and profit
•intrinsic value and time value
•moneyness (ITM/ATM/OTM) and break-even
•put-call parity relationships and intuition
•basic hedging examples (protective put, covered call)

Suggested study tasks
•draw payoff and profit diagrams for 10 contracts
•compute profit for 12 scenarios including premiums
•classify moneyness for 20 quick checks
•use put-call parity to solve for an unknown price in 8 problems
•choose a hedge for 6 short vignettes

Common pitfalls
•mixing payoff with profit (forgetting premium)
•flipping long vs short positions
•using strike vs spot inconsistently
•misapplying put-call parity inputs
•assuming parity applies to American options without caveats