Option Premium

Premium is the price of the options.

The option premium is determined by a number of factors
which includes :

• Stock price
• Strike price
• Time remaining until expiration (time value)
• Volatility

However, the premium may be affected by

• Interest rates
• Market conditions
• dividend rate

An option premium is priced on a per share basis. One contract
of option corresponds to 100 shares. Therefore, if you buy an option
at $1.50, the premium you need to invest is $150.

The premium will decreases as its expiration date approaches
and become worthless after that date.