Premium

Premium is another word for the price of an option. The value is primarily affected by:

  • the difference between the underlying futures contract price and the strike price
  • the time remaining for the option to be exercised
  • and the volatility of the underlying futures contract price

These factors affect the option premium to a lesser degree:

  • interest rates
  • market conditions

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There is a risk of loss in futures and options trading. Past performance is not indicative of future results. The information contained in this publication is taken from sources believed to be reliable, but is not guaranteed by Commodity & Ingredient Hedging, LLC, nor any affiliates, as to accuracy or completeness, and is intended for purposes of information and education only. Nothing therein should be considered as a trading recommendation by Commodity & Ingredient Hedging, LLC. The rules and regulations of the individual exchanges should be consulted as the authoritative source on all contract specifications and regulations.

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