The price paid for the option contract is referred to as the
A) Forward price.
B) Exercise price.
C) Striking price.
D) Option premium.
E) Call price.

Question

Quizplus · Accepted Answer

The price paid for an option contract is referred to as the option premium. It is the amount paid by the buyer of the option to the seller in order to have the right, but not the obligation, to buy or sell the underlying asset at a specified price. The other choices listed are not correct; the forward price refers to the future delivery price of an asset, the exercise price and striking price both refer to the price at which the underlying asset can be bought or sold, and the call price is specific to call options.

The Price Paid for the Option Contract Is Referred to as the