Option Premium
The market price of an option that is paid by an option buyer to the option writer (seller) for the right to buy (call) or sell (put) the underlying security at a specified price (called “strike price” or “exercise price”) by the option’s expiration date. The premium is set by the supply and demand of option traders as they evaluate the underlying security’s future market value. Premium prices are quoted in increments of eighths or sixteenths.
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