What Is Option Premium?
The premium is the price paid by the buyer to the seller to purchase the option. It represents the cost of owning the right.
Premium depends on factors like:
Current market price
Strike price
Time left to expiry
Volatility
Interest rates
Demand and supply
Two components decide the premium:
Intrinsic Value – Real value based on price difference.
Time Value – Extra value because the option has time before expiry.
As expiry approaches, time value decreases — this is called Time Decay (Theta).
The premium is the price paid by the buyer to the seller to purchase the option. It represents the cost of owning the right.
Premium depends on factors like:
Current market price
Strike price
Time left to expiry
Volatility
Interest rates
Demand and supply
Two components decide the premium:
Intrinsic Value – Real value based on price difference.
Time Value – Extra value because the option has time before expiry.
As expiry approaches, time value decreases — this is called Time Decay (Theta).
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Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.