Premium

Premium is the price of the option itself. When you buy a contract, you pay premium. When you sell one, you collect it.

Why it moves

Premium changes with the underlying price, time left in the contract, implied volatility, and how liquid the market is.

What beginners get wrong

Cheap premium is not the same as good value. An option can look inexpensive and still be a bad trade if the spread is wide or the expiration is too tight.

Practical takeaway

Think of premium as the cost of the thesis, not the reward. If the contract does not fit the setup, the price is not the main problem.