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Glossary
ABCDEGIOPRSTV
A
  • Assignment
  • At-the-money (ATM)
B
  • Break-even
C
  • Covered call
D
  • Days to expiry (DTE)
  • Delta (Δ)
E
  • Exercise
  • Extrinsic value
G
  • Gamma (Γ)
I
  • Implied volatility (IV)
  • In-the-money (ITM)
  • Intrinsic value
  • IV rank
O
  • Open interest
  • Out-of-the-money (OTM)
P
  • Premium
R
  • Rho (ρ)
S
  • Strike price
T
  • Theta (Θ)
V
  • Vega (ν)
  • Volume
basics

Premium

The price of an option contract.

Premium is what you pay (or receive) to buy or sell an option. It's quoted per share but traded in contracts of 100 shares — a premium of $2.50 means $250 per contract. Premium = intrinsic value + extrinsic value.

Related

Intrinsic value

The amount an option is in-the-money right now.

Extrinsic value

The portion of an option's price that isn't intrinsic — time + volatility premium.

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