Premium

The price of the option itself — what the buyer pays and the seller receives, quoted per share (so × 100 per contract).

The premium is the price you pay to buy an option, or the amount you collect when you sell one. It is quoted per share, so a premium of 2.50 on a standard equity option actually costs 250 dollars, because one contract covers 100 shares. That single number bundles together intrinsic value (how far in the money the option already is) and time value (what the market charges for the remaining chance of a favourable move).

In practice, buyers want the premium to be cheap relative to the move they expect, while sellers treat it as income they keep if the option expires worthless. If you buy a call for 3.00, the stock has to rise enough to cover that 3.00 before you break even, not just past the strike. Sellers, on the other hand, watch theta slowly erode the premium in their favour day after day.

A common mistake is treating a low premium as automatically cheap. A far out of the money option can cost very little and still be a poor bet, because the probability of it ever paying off is tiny. Always weigh the premium against the odds and the size of the move it needs, not against the raw dollar figure alone.

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All options terms

Call Put Strike price Expiration In the money (ITM)At the money (ATM)Out of the money (OTM)Intrinsic value Time value (extrinsic)Delta Gamma Theta Vega Implied volatility (IV)Open interest Assignment Exercise Spread Break-even Probability of profit (POP)Assignment risk / early assignment LEAPS Naked (uncovered) option Rho Historical volatility (HV)Volume Bid-ask spread Moneyness Covered call Cash-secured put Vertical spread Iron condor Straddle Strangle Rolling Margin Max pain American-style option European-style option Contract multiplier Debit vs credit Volatility skew The Greeks Underlying Hedge Leverage Expected move Notional value Protective put Collar Butterfly spread Iron butterfly Calendar spread Diagonal spread Credit spread Debit spread Bull call spread Bear put spread Ratio spread Synthetic position The wheel strategy Poor man’s covered call (PMCC)Box spread Put-call parity Pin risk IV crush IV rank / IV percentile Ex-dividend date Deep in the money Weeklys 0DTE (zero days to expiration)Order types (to open / to close)Buying power reduction Cash settlement Market maker Slippage Mid price Black-Scholes model

Educational use only. Quotes are delayed ~15 minutes and nothing here is financial advice. Options trading involves substantial risk of loss.