What is an Option Premium?
An option premium is the price that you pay for a put or call options contract. When you buy an option, you are getting the right to trade its underlying asset for a specified price for a set period. The price you pay for this right is called option premium.
The size of an option premium is influenced by three main factors: the price of the underlying asset, its level of volatility (or risk) and the option's time to expiry.
An option premium is the price that you pay for a put or call options contract. When you buy an option, you are getting the right to trade its underlying asset for a specified price for a set period. The price you pay for this right is called option premium.
The size of an option premium influenced by three main factors: the price of the underlying asset, its level of volatility (or risk) and the option's time to expiry.
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