Option Premium

Search Dictionary

Definition of 'Option Premium'

The price that you pay to own an option is known as the option premium. This is also known as the option price. Do not confuse this with the option's strike price which is the exercise price for the option.

The option premium has two components; its intrinsic value and its time value. The option will only have intrinsic value if it's in the money. If its at the money or out the money then its premium will be that same as its time value.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.

Emini Day Trading / Daily Notes / Forecast / Economic Events / Trading Indicators / Search / Terms and Conditions / Disclaimer / Books / Online Books / Site Map / Contact / Privacy Policy / Links / About / Day Trading Forum / Investment Calculators / Pivot Point Calculator / Market Profile Generator / Fibonacci Calculator / Mailing List / Advertise Here / Articles / Financial Terms / Brokers / Software / Holidays / Stock Split Calendar / Features / Mortgage Calculator / User Pages / Donate

Copyright © 2004-2018, MyPivots. All rights reserved.