Net Option Premium

外汇网2021-06-19 14:12:45 84

The net amount an investor or trader will pay for selling one option, and purchasing another. The combination can include any number of puts and calls and their respective position in each.

The net option pmium can either be positive, which repsents a net cash outflow, or a negative number, which repsents a net cash inflow.

For example, assume an investor wants to take a synthetic covered call position in a particular stock. If the investor pays $2.50 per lot for a put option with a strike price of $55, and then sells a call option at the same strike price for $1.00 per lot. The net option pmium in this example is $1.50.

If, on the other hand, the investor pays $0.50 per lot for a put option with the same strike price, and sells a call option for $1.00 per lot, then there will be a net cash inflow (a negative net option pmium) of $0.50.

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