Options are analogous to life or fire insurance and, in those cases, it is clearly desirable that the premium be 'wasted'.

Name: Options are analogous to life or fire insurance and, in those cases, it is clearly desirable that the premium be 'wasted'.
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Question

Quizplus · Accepted Answer

In both options and insurance, the premium is a cost paid to mitigate risk. If the risk doesn't materialize, the premium is considered 'wasted,' but this is desirable as it means the adverse event didn't occur.

Options Are Analogous to Life or Fire Insurance And, in Those