Options Basics

Option Premiums

The option premium is the price of an options contract. Option premiums are determined by intrinsic and extrinsic value.
Option Premiums
Kirk Du Plessis
Apr 19, 2021

The option premium is the price that you pay to acquire the contract and they are mainly determined by two broad categories: extrinsic and intrinsic value. For option sellers this would be the credit that you receive for giving up your right and obligation to sell or buy stock in the future. Option premiums are constantly changing and never stagnant. That means that the price you pay or receive today will be different in the future as the stock moves and time decays.

No tags found.
Next lesson
Option Expiration
The expiration date is the last trading day that an option can be exercised. There are weekly, monthly, and quarterly expirations available. Options expiration for monthly contracts is the third Friday of the expiration month.

Trade smarter with automation