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The price paid to acquire the option. Also known simply as option price. Not to be confused with the strike price. Market price, volatility and time remaining are the primary forces determining the premium. There are two components to the options premium and they are intrinsic value and time value.
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Q4: What is binary options trading? Answer: Binary options, also known as digital options, or all-or-nothing options, are contracts which have only two possible outcomes - either they win, or they lose - therefore binary by nature. A binary option involves a fixed payout after.
Commissions For ease of understanding, the calculations depicted in the above examples did not take into account commission charges as they are relatively small amounts (typically around 10 to 20) and varies across option brokerages. However, for active traders, commissions can eat up a sizable.
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