premium investment & finance definition
- A price
that is above market prices.
- The amount
that a policy holder pays an insurance company for coverage.
- In the
options market, the cost of the option.
- In the
futures market, an upward adjustment in price that is allowed for delivery of a
commodity of a higher grade against a futures contract.
See premium in Wall Street Words
- The price at which an option trades. The size of the premium is affected by various factors including the time to expiration, interest rates, strike price, and the price and price volatility of the underlying asset. Also called option premium.
- The amount by which a bond sells above its face value.
- The excess by which a warrant trades above its theoretical value.
- The amount by which a convertible bond sells above the price at which the same bond without the convertible feature would sell.
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