Option Premium
/ˈɒpʃən ˈprimiəm/
Definitions
- (n.) The payment made by a buyer to a seller to acquire the right, but not the obligation, to buy or sell an underlying asset at a specified price within a certain period.
The option premium is non-refundable even if the buyer chooses not to exercise the option.
Forms
- option premium
- option premiums
Related terms
See also
Commentary
The option premium represents the price of securing contractual rights in options trading and is distinct from the strike price or the underlying asset's market value.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.