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Option premium explained.

The price paid for an option. Quotes are commonly per share for standard equity contracts, so the multiplier matters. The premium does not describe every risk of writing an option.

Options

Option premium

The price paid for an option. Quotes are commonly per share for standard equity contracts, so the multiplier matters. The premium does not describe every risk of writing an option.

Example: A fictional $3 quote for a standard 100-share contract means $300 before costs.

Watch for: Confusing a per-share quote with the full contract cost.

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