Premium is the price of the option, which is the price paid by the buyer to the seller. Option trading is a commission, which is determined by market bidding. The factors that affect the level of option premium include execution price, futures market price, maturity date, futures price volatility, risk-free interest rate and market supply and demand forces.

The commission can be divided into two parts: one part is the intrinsic value, that is, the profit of the immediate execution of the option. Only real options have intrinsic value, so it is also called real value. The second is the time value, which is the part where the royalty is greater than the connotation value.

For example, in June 65438+ 10, the futures price of strong wheat was 1660 yuan/ton. The premium of 1 month strong wheat call option with exercise price of 1600 yuan/ton is 65 yuan/ton, so the intrinsic value is 1660- 1600=60 yuan and the time value is 65-60=5 yuan; 1 month The exercise price of the strong wheat put option is 1640 yuan, with a premium of 20 yuan. The connotation value is 0, and 20 yuan is all time value.