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Premium
(1) The additional payment allowed by exchange regulation for delivery of higher-than-required standards or grades of a commodity against a futures contract. (2) In speaking of price relationships between different delivery months of a given commodity, one is said to be "trading at a premium" over another when its price is greater than that of the other. (3) In financial instruments, the dollar amount by which a security trades above its principal value. The price of an option–the sum of money that the option buyer pays and the option seller receives for the rights granted by the option.
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- Part of Speech: noun
- Synonym(s):
- Blossary:
- Industry/Domain: Financial services
- Category: Commodity exchange
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