Investor Glossary-option premiumInvestor Glossary-option premiumInvestor Glossary-option premiumInvestor Glossary-option premiumInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Option Premium

The HTML to link to this page
 

Option premium refers to the per-share amount that a buyer pays for an option - for the right to buy/"call" or sell/"put" a security at a specified price in the future. An option premium is a nonrefundable, full payment (not a down payment) for the rights specified in the stock option contract. One pays an option premium regardless of whether or not the option is actually exercised. The option premium often changes, due to fluctuating market conditions and economic variables. An option premium is therefore determined by several factors. The main thing affecting the option premium is the difference between the stock price and the strike price, which is the specified future price. Additional primary factors affecting the option premium include the time remaining for the option to be exercised and the volatility of the underlying stock.



Rate this option premium definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: quality assurance, minority interest, command economy, Zero Cost Collar, APR, annual return, Key Rate Duration, average price per share, ex-dividend date, phantom income, risk management, in escrow, EBITDA, diluted share, option premium, cancelled check, covered put, required rate of return, labor relations, VIX, balance sheet, current ratio, LIBOR, real GDP, 401a, debt service coverage, 1031 exchange, margin rate, 144a, liquidity ratio, class C shares, wholly-owned subsidiary, deferred tax, irrevocable trust, 1035 exchange, stock market close, deferred revenue, implied volatility, reverse mortgage, retained earnings, dividends payable, inflation, stock split, open position, limit order, ex-dividend, FICO score, FTSE, per diem


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use