Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
The money one makes from selling (or writing) an option contract. The term derives its name from the fact that the original sale price of an option is called the premium. One easy way to make money investing at little risk is to write covered options one does not expect to be exercised, and profiting from the premium income.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Fees in the form of premiums received by an investor who sells short a call option or put option. For example, an investor holding shares of BP can earn premium income by writing covered call options that give the buyer of the calls the right to purchase the option writer's BP shares at a fixed price until a stated date.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.