Option Premium Calculator

✖Share Option Warrant is a financial instrument that gives the holder the right to buy a specific number of shares of a company's stock at a predetermined price within a specified time frame.ⓘ Share Option Warrant [SOW]			+10% -10%
✖Number of Securities Per Option Warrant refers to the amount of underlying securities that can be bought or sold through the exercise of a single option warrant.ⓘ Number of Securities Per Option Warrant [NSOW]			+10% -10%
✖Purchase Price refers to the amount of money paid to acquire an asset, product, service, or investment.ⓘ Purchase Price [PP]			+10% -10%
✖Price Security refers to the price of a security, such as a stock, bond, commodity, or other financial instrument.ⓘ Price Security [PS]			+10% -10%

✖Option Premium refers to the price paid by the buyer of an option to the seller, also known as the option writer.ⓘ Option Premium [OPR]

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Formula

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Option Premium

Formula

`"OPR" = (("SOW"/"NSOW")+("PP"*100/"PS"-100))`

Example

`"846.5909"=(("500"/"55")+("1500"*100/"160"-100))`

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Option Premium Solution

STEP 0: Pre-Calculation Summary

Formula Used

Option Premium = ((Share Option Warrant/Number of Securities Per Option Warrant)+(Purchase Price*100/Price Security-100))
OPR = ((SOW/NSOW)+(PP*100/PS-100))
This formula uses 5 Variables

Variables Used

Option Premium - Option Premium refers to the price paid by the buyer of an option to the seller, also known as the option writer.
Share Option Warrant - Share Option Warrant is a financial instrument that gives the holder the right to buy a specific number of shares of a company's stock at a predetermined price within a specified time frame.
Number of Securities Per Option Warrant - Number of Securities Per Option Warrant refers to the amount of underlying securities that can be bought or sold through the exercise of a single option warrant.
Purchase Price - Purchase Price refers to the amount of money paid to acquire an asset, product, service, or investment.
Price Security - Price Security refers to the price of a security, such as a stock, bond, commodity, or other financial instrument.

STEP 1: Convert Input(s) to Base Unit

Share Option Warrant: 500 --> No Conversion Required
Number of Securities Per Option Warrant: 55 --> No Conversion Required
Purchase Price: 1500 --> No Conversion Required
Price Security: 160 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

OPR = ((SOW/NSOW)+(PP*100/PS-100)) --> ((500/55)+(1500*100/160-100))

Evaluating ... ...

OPR = 846.590909090909

STEP 3: Convert Result to Output's Unit

846.590909090909 --> No Conversion Required

FINAL ANSWER

846.590909090909 ≈ 846.5909 <-- Option Premium

(Calculation completed in 00.004 seconds)

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Credits

Created by Aashna

IGNOU (IGNOU), India

Aashna has created this Calculator and 100+ more calculators!

Verified by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

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< 13 International Finance Calculators

FRA Payoff ( Long Position )

Go FRA Payoff = Notional Principal*(((Underlying Rate at Expiration-Forward Contract Rate)*(Number of Days in Underlying Rate/360))/(1+(Underlying Rate at Expiration*(Number of Days in Underlying Rate/360))))

Put-Call Parity

Go Call Option Price = Spot Price of Underlying Asset+Put Option Price-((Strike Price)/((1+(Risk-Free Rate of Return/100))^(No. of Months/12)))

Option Premium

Go Option Premium = ((Share Option Warrant/Number of Securities Per Option Warrant)+(Purchase Price*100/Price Security-100))

Balance of Financial Account

Go Balance of Financial Account = Net Direct Investment+Net Portfolio Investment+Asset Funding+Errors and Omissions

Annualised Forward Premium

Go Annualised Forward Premium = (((Forward Rate-Spot Rate)/Spot Rate)*(360/No. of Days))*100

Balance of Capital Account

Go Balance of Capital Account = Surpluses or Deficits of Net Non-Produced+Non-Financial Assets+Net Capital Transfers

Current Account Balance

Go Current Account Balance = Exports-Imports+Net Income Abroad+Net Current Transfers

Uncovered Interest Rate Parity

Go Expected Future Spot Rate = Current Spot Exchange Rate*((1+Domestic Interest Rate)/(1+Foreign Interest Rate))

Covered Interest Rate Parity

Go Forward Exchange Rate = (Current Spot Exchange Rate)*((1+Foreign Interest Rate)/(1+Domestic Interest Rate))

International Fisher Effect using Interest Rates

Go Change in Exchange Rate = ((Domestic Interest Rate-Foreign Interest Rate)/(1+Foreign Interest Rate))

Relative Strength Index

Go Relative Strength Index = 100-(100/(1+(Average Gain during Up Period/Average Loss during Down Period)))

Bid Ask Spread

Go Bid Ask Spread = ((Ask Price-Bid Price)/Ask Price)*100

International Fischer Effect using Spot Rates

Go Change in Exchange Rate = (Current Spot Exchange Rate/Spot Rate in Future)-1

Option Premium Formula

Option Premium = ((Share Option Warrant/Number of Securities Per Option Warrant)+(Purchase Price*100/Price Security-100))
OPR = ((SOW/NSOW)+(PP*100/PS-100))

What do you mean by Option Premium ?

Option Premium refers to the price that a buyer pays to the seller for an option contract. It is the difference between the current market price of the underlying asset and the strike price of the option. For call options, the intrinsic value is the difference between the current market price and the strike price, if positive. For put options, it is the difference between the strike price and the current market price, if positive. Extrinsic Value is the portion of the option premium that is not accounted for by the intrinsic value. It represents the value of the option's potential to become more profitable before expiration. The more time an option has until expiration, the higher its time value. Higher volatility generally leads to higher option premiums, as there is a greater opportunity of the underlying asset's price experiencing significant fluctuations before expiration. Interest rates can also affect option premiums, as they impact the cost of carrying the underlying asset.

How to Calculate Option Premium?

Option Premium calculator uses Option Premium = ((Share Option Warrant/Number of Securities Per Option Warrant)+(Purchase Price*100/Price Security-100)) to calculate the Option Premium, Option Premium represents the cost of purchasing the right, but not the obligation, to buy or sell an underlying asset at a specified price (the strike price) within a predetermined time (until the expiration date). Option Premium is denoted by OPR symbol.

How to calculate Option Premium using this online calculator? To use this online calculator for Option Premium, enter Share Option Warrant (SOW), Number of Securities Per Option Warrant (NSOW), Purchase Price (PP) & Price Security (PS) and hit the calculate button. Here is how the Option Premium calculation can be explained with given input values -> 847.5 = ((500/55)+(1500*100/160-100)).

FAQ

What is Option Premium?

Option Premium represents the cost of purchasing the right, but not the obligation, to buy or sell an underlying asset at a specified price (the strike price) within a predetermined time (until the expiration date) and is represented as OPR = ((SOW/NSOW)+(PP*100/PS-100)) or Option Premium = ((Share Option Warrant/Number of Securities Per Option Warrant)+(Purchase Price*100/Price Security-100)). Share Option Warrant is a financial instrument that gives the holder the right to buy a specific number of shares of a company's stock at a predetermined price within a specified time frame, Number of Securities Per Option Warrant refers to the amount of underlying securities that can be bought or sold through the exercise of a single option warrant, Purchase Price refers to the amount of money paid to acquire an asset, product, service, or investment & Price Security refers to the price of a security, such as a stock, bond, commodity, or other financial instrument.

How to calculate Option Premium?

Option Premium represents the cost of purchasing the right, but not the obligation, to buy or sell an underlying asset at a specified price (the strike price) within a predetermined time (until the expiration date) is calculated using Option Premium = ((Share Option Warrant/Number of Securities Per Option Warrant)+(Purchase Price*100/Price Security-100)). To calculate Option Premium, you need Share Option Warrant (SOW), Number of Securities Per Option Warrant (NSOW), Purchase Price (PP) & Price Security (PS). With our tool, you need to enter the respective value for Share Option Warrant, Number of Securities Per Option Warrant, Purchase Price & Price Security and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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