Definition of 'Premium (Options)'
The total price of an option contract. The premium is paid to the seller of the option and is quoted on a per-share basis. Thus, a premium of 7/8 on a option contract represents a payment of $87.50 ($0.875 x 100 shares).Premium is not refundable, nor does it ever come back to the option buyer in any way. In some strategies that lay out buying and selling options on the same stock, the selling portion of the theory is to collect premium to defray the cost of the purchase.
Articles Related to 'Premium (Options)':
By Henry Schwartz | 10/02/12 - 10:01 AM EDT
By Tim Melvin | 01/24/12 - 01:30 PM EST
By Bob Lang | 01/27/14 - 09:30 AM EST
By Timothy Collins | 04/03/12 - 10:11 AM EDT