Glossary term
Premium (Options)
The price paid by the option buyer and received by the seller for the contract; quoted per share, multiplied by 100 per contract.
Premium is the price paid by the option buyer and received by the seller for the contract, quoted per share and multiplied by 100 for a standard contract. It comprises intrinsic value (if any) plus time value, the latter eroding as expiration approaches. Premium is the income that covered-call and cash-secured-put strategies are designed to harvest. See Covered Calls 101.