Lesson Overview

Option Premiums

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 erodes.

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