Premium Value Formula

[sunandaC]

All options include premiums or values over and above the option’s intrinsic value.

Premium values vary based on three factors: the market anticipation of the volatility of the underlying security;

the time remaining until the option’s expiration; and current interest rates.

(Premium value is also known as time value or extrinsic value.)

CALL PREMIUM VALUE

Call Option Price – Call Intrinsic Value = Call Premium Value*

PUT PREMIUM VALUE

Put Option Price – Put Intrinsic Value = Put Premium Value

 

[rosemarry2]

All options include premiums or values over and above the option’s intrinsic value.

Premium values vary based on three factors: the market anticipation of the volatility of the underlying security;

the time remaining until the option’s expiration; and current interest rates.

(Premium value is also known as time value or extrinsic value.)

CALL PREMIUM VALUE

Call Option Price – Call Intrinsic Value = Call Premium Value*

PUT PREMIUM VALUE

Put Option Price – Put Intrinsic Value = Put Premium Value

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