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Option Premium Formula

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Option Premium refers to the price paid by the buyer of an option to the seller, also known as the option writer. Check FAQs

OPR = ((\frac{SOW}{NSOW}) + (PP \cdot \frac{100}{PS} - 100))

OPR - Option Premium?SOW - Share Option Warrant?NSOW - Number of Securities Per Option Warrant?PP - Purchase Price?PS - Price Security?

Option Premium Example

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Here is how the Option Premium equation looks like with Values.

Here is how the Option Premium equation looks like with Units.

Here is how the Option Premium equation looks like.

846.5909 = ((\frac{500}{55}) + (1500 \cdot \frac{100}{160} - 100))

846.5909 = ((\frac{500}{55}) + (1500 \cdot \frac{100}{160} - 100))

846.5909 = ((\frac{500}{55}) + (1500 \cdot \frac{100}{160} - 100))

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Option Premium Solution

Follow our step by step solution on how to calculate Option Premium?

FIRST Step Consider the formula

OPR = ((\frac{SOW}{NSOW}) + (PP \cdot \frac{100}{PS} - 100))

Next Step Substitute values of Variables

∴

OPR = ((\frac{500}{55}) + (1500 \cdot \frac{100}{160} - 100))

Next Step Prepare to Evaluate

∴

OPR = ((\frac{500}{55}) + (1500 \cdot \frac{100}{160} - 100))

Next Step Evaluate

∴

OPR = 846.590909090909

LAST Step Rounding Answer

∴

OPR = 846.5909

Option Premium Formula Elements

Variables

Option Premium

Option Premium refers to the price paid by the buyer of an option to the seller, also known as the option writer.

Symbol: OPR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Option Premium

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.

Symbol: SOW

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Share Option Warrant

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.

Symbol: NSOW

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Number of Securities Per Option Warrant

Purchase Price

Purchase Price refers to the amount of money paid to acquire an asset, product, service, or investment.

Symbol: PP

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Purchase Price

Price Security

Price Security refers to the price of a security, such as a stock, bond, commodity, or other financial instrument.

Symbol: PS

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Price Security

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Go Covered Interest Rate Parity

F = (e o) \cdot (\frac{1 + r f}{1 + r d})

How to Evaluate Option Premium?

Option Premium evaluator uses Option Premium = ((Share Option Warrant/Number of Securities Per Option Warrant)+(Purchase Price*100/Price Security-100)) to evaluate 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 evaluate Option Premium using this online evaluator? To use this online evaluator 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.

FAQs on Option Premium

What is the formula to find Option Premium?

The formula of Option Premium is expressed as Option Premium = ((Share Option Warrant/Number of Securities Per Option Warrant)+(Purchase Price*100/Price Security-100)). Here is an example- 847.5 = ((500/55)+(1500*100/160-100)).

How to calculate Option Premium?

With Share Option Warrant (SOW), Number of Securities Per Option Warrant (NSOW), Purchase Price (PP) & Price Security (PS) we can find Option Premium using the formula - Option Premium = ((Share Option Warrant/Number of Securities Per Option Warrant)+(Purchase Price*100/Price Security-100)).

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Option Premium Formula

Option Premium Example

Option Premium Solution

Option Premium Formula Elements

Other formulas in International Finance category

How to Evaluate Option Premium?

FAQs on Option Premium

Variable Name