Question

Contained below is a list of possible movements in factors that affect option pricing.

Using a ↑­ to represent an increase in the value of the option and ↓ to represent a decrease in the value of an option all else being equal.

	Call Option Value	Put Option Value
A decrease in the current spot currency price.	Answer↑↓	Answer↑↓
A decrease in the exercise price of the option.	Answer↑↓	Answer↑↓
A decrease in market volatility	Answer↑↓	Answer↑↓
A decrease in the term to maturity of an American Option	Answer↑↓	Answer↑↓
An increase in the risk-free rate	Answer↑↓	Answer↑↓

Answer 1

Following is the summary of the factors which effects the option prices:

where Asset price - spot price , Variance - Volatility & Time to expiration - Maturity

Using the data from the above table we can derive the below solution:

Factors	Call Option Value	Put Option Value
A decrease in the current spot currency price	↓	↑
A decrease in the exercise price of the option	↑	↓
A decrease in market volatility	↓	↓
A decrease in the term to maturity of an American Option	↓	↓
An increase in the risk-free rate	↑	↓