January 2026: I am moving Macroption to new system. Account login and checkout are paused for a few days. See more details. To get a calculator, contact me directly.

Option Premium

This term has two possible interpretations.

The first, and more widely used, is that option premium is the same thing as option price and has two components: intrinsic value and time value.

The second, less widely used but more accurate, is that option premium is the time value only (premium over intrinsic value).