The premium of an option is the price paid by the buyer or the amount collected by the seller when a trade is made. The premium for an option is quoted on a per-share basis, so the total amount is the price quoted times 100 since each contract represents 100 shares of stock.
Here is a look at the contract multiplier as shown within the TOS platform. In this case, each contract represents 100 shares of stock:
An option’s premium is comprised of any intrinsic value + time value.
Return to the main options glossary page to learn more terms.
