Option premiums

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Option premiums

Option price

  • Option price includes two portions:
    • the difference between the strike price of the option and the spot price of the underlying asset and
    • the premium of the option. The first part could be referred to as intrinsic value or “in-the-money” portion”.
  • The second part is purely the value paid for the option.

  • Call option premium chart

    The following chart shows the premiums (not the exercise values) for call options, for different maturity dates and for all strike prices.


    Option premium

  • The premium paid on the option should be considered carefully when choosing a strike price.
  • Here we show how to look at the option premiums for Apple for different strike prices and for different maturities.

  • Simpler code