The amount that the buyer pays for his right to buy or sell the underlying asset on which the option is written at a fixed price at the time specified in the option. The option premium consists of two parts of intrinsic value and time value.
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The amount that the buyer pays for his right to buy or sell the underlying asset on which the option is written at a fixed price at the time specified in the option. The option premium consists of two parts of intrinsic value and time value.
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