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Option Premium
Options
The option premium is the option's market price: what the buyer pays and the seller receives.
It has two parts: intrinsic value, what the option would be worth if exercised now, and time value, which depends on the time remaining and expected volatility. Prices are quoted per share; multiply by 100 for the cost of a standard contract.
Example
With the stock at $105, a $100 strike call priced at $7 has $5 of intrinsic value and $2 of time value. One contract costs $700.
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