What is an option premium

    • Options Premium Explained | The Options & Futures Guide

      The premium is the price of an option—the sum of money that the option buyer pays and the option seller receives for the rights granted by the option. The strike price is the price at which the futures contracts underlying a call or put option can be purchased (if a call) or sold (if a put).

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    • [DOC File]1) If a bank manager chooses to hedge his portfolio of ...

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      New Crop Soybeans -- Put Option Strategy. It is May and I am considering buying a put option to provide price insurance for the soybean crop I just planted. November futures are $12.50 and the November at-the-money put option premium is 30 cents.

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    • [DOC File]1)

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      The "Premium Option” is a Basic Service Calling Area option that has a flat monthly rate for unlimited calling from the Home Exchange to the all of the exchanges within the BSCA. Exchanges in which the Premium and the Economy options are identical are classified as having only a Premium calling area.

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    • [DOCX File]University of Vermont

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      The spot rate as of today is $1.62, and the option premium is $.04 per unit. Your forecast of the percentage change in the spot rate was determined from the following regression model: e. t = a 0 + a 1 DINF t-1 + a 2 DINT t + uwhere e. t =percentage change in British pound value over period t

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    • [DOC File]Basic differences between forward and futures contracts

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      the premium. unlimited. The most money an option seller (writer) can loose if he/she buys an option is . the premium. unlimited. If you exercise an option you are transferred to the _____ market. If a person buys a call option, he/she receives the right to . buy. sell. the underlying futures contract. If a person buys a put option, he/she ...

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    • [DOCX File]Chapter 11

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      An option allowing the holder to buy an asset in the future is a . put option. call option. swap. premium. forward contract. Question Status: Study Guide. An option that gives the owner the right to sell a financial instrument at the exercise price within a specified period of time is a. call option. put option. American option. European option.

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    • [DOC File]OPTIONS

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      If the buyer had chosen to exercise the option, the cost of purchasing the £31,250 would have been the strike price multiple by the contract amount or . b. ($1.94/£) X £31,250 = $ 60,625. Notice that the option premium (the cost of option) represents less than 1% of the value of the underlying purchase: P = S/X * 100%. c. $359.38 X 100 = 0.59%

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    • [DOC File]Futures and Options: An Overview

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      An option not at-the-money but with a zero intrinsic value (that is, a call option for which V < X; or a put option for which X < V). Time value of an option: The difference between the option’s premium …

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    • [DOC File]65-407

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      Finally, unlike long option positions which have a maximum potential loss, the value of the option premium, short options have virtually unlimited risk. SPAN accounts for this characteristic of short option positions by having a minimum margin assessed, regardless of …

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    • [DOC File]STANDARD PORTFOLIO ANALYSIS of RISK (SPAN)

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      Because the option owner does not have to exercise the option if it is to his disadvantage, the option has a price, or premium, whereas no price is paid at inception to enter into a futures (or forward) contract. 6. What is meant by the terminology that an option is in-, at-, or out-of-the-money? Answer: A call (put) option with S. t > E (E > S t

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