Letter from Employer to Employees

8. Assume that the Japanese yen is trading at a spot price of 92.04 cents per 100 yen. Further assume that the premium of an American call (put) option with a striking price of 93 is 2.10 (2.20) cents. Calculate the intrinsic value and the time value of the call and put options. Solution: Premium - Intrinsic Value = Time Value. Call: 2.10 - Max ................
................