A call option is a financial contract that gives the buyer the right to purchase the underlying shares at an agreed price. The call premium is the price paid by the buyer to the seller (or writer) to obtain this right.
Is call price the same as premium?
The call price is the pre-determined price at which the issuer of a callable security is able to redeem them from investors. Because callable securities generate additional risk for investors, bonds or shares with call prices will trade at a higher price than otherwise, known as the call premium.
What is a premium on a call option?
A call price refers to the price that a preferred stock or bond issuer would pay to buyers if they chose to redeem the callable security before the maturity date.
What does call price mean?
If the stock price is below the strike price at expiration, then the call is out of the money and expires worthless. The call seller keeps any premium received for the option.