What is options premium?

What is options premium?

Video Transcription

Hello again. Casey Jensen here at OptionsANIMAL. Now we’re discussing options premium.

So how does options premium work in the Stock Market? Well, let’s say a stock is trading at 35, and you want to buy a call option. So if we choose strike price 45, what you’re buying is the right to buy the stock at 45, within a set time frame, let’s just say it’s maybe three months. And the stock has good earnings, they gap up. Maybe they’re trading at 50. Well, you have the right to buy them at 45. So that should cost you some money, so what you look at here now is the bid is where we always sell, and the ask is where we always buy. So notice our ask price to buy that call option would be 55 cents. That’s the premium that you pay to have this right to buy the stock at 45. And you could look at it from that same perspective when you’re trading puts for the sake of understanding premium; I just wanted to focus the call options right here.

So now let’s talk about a call option that you sell, and the premium associated with that. So let’s say that you choose strike price 40 in this case. The stock’s trading at 35. Now when we sell a call option, we’re taking on the obligation to sell the stock at 40, so we should get paid for that. We’re saying we’re willing to cap our upside potential. We should get paid for that. There’s that premium.

So notice, when we sell, we sell at the bid price. So premium is simply that 80 cents right there. And we would get to keep that 80 cents, you know, say that this contract was 90 days. If the stock is trading at $35.00 a share, 90 days later we get to keep that premium. And that’s how that works, and we’ll discuss some further videos, little bit more details into that strategy.

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Options Animal – A Solid Investment for the Right Person If you're seriously thinking about joining Options Animal, here’s what I’ve found to be true from my own experience. First off, this isn’t for everyone — and I mean that in a good way. Options Animal attracts a unique kind of member: curious, serious about financial education, and committed to growth. The membership tends to be smart, experienced, and inquiring. The community is intelligent, well-educated, and experienced, but also welcoming and supportive. People are friendly, down-to-earth, and genuinely interested in helping each other grow. If that sounds like your kind of group, you’ll probably feel right at home. That said, this program is best suited for investors who are ready to put in the time. The program expects you to study, apply what you learn, and take a hard look at how you're doing, you’ll find tremendous value here. There’s meaningful homework. There’s a process. But if you’re committed, it really does pay off. Discipline is also key. The instructors provide a clear, structured approach. When I deviated from that structure, I felt the consequences — but also gained important insight. Mistakes become learning opportunities here, and that’s part of what makes the experience so worthwhile. One of the big strengths of OA is how they teach you to be flexible. They teach you to adapt to market conditions, not just follow a static strategy. It’s clear they live by this principle, and their teaching reflects that. Most importantly, you’re never on your own. The team at Options Animal is always available, approachable, and incredibly generous with their time and expertise. Whether you're asking questions, learning from live sessions, or following along with real trade recommendations, you’ll feel supported every step of the way. Each instructor brings a different perspective, which allows you to find an approach that matches your style and goals. Now, about the cost: if you're thinking of it as an expense, it might not feel worth it. But if you see it as an investment in your financial future, it makes a lot more sense. You're paying for education, structure, and guidance that can really make a difference. You don’t need a huge portfolio either — the strategies can scale. A perspective regarding returns (ROI), the payoff improves with time. As your skills and confidence grow, so does your ability to generate solid returns. For me, this has absolutely been a smart investment — one that continues to pay dividends both financially and in terms of personal growth. For the right individual, Options Animal is more than just a program — it’s a powerful, ongoing advantage being a really solid investment — in every sense of the word.
Response from the owner:Thank you for sharing your detailed and insightful experience with Options Animal. We're thrilled to hear that you found value in our community, structure, and instructional approach. Your emphasis on discipline and adaptability perfectly captures what we strive to teach our members. It’s rewarding to know you see your involvement as an investment in your financial future and personal growth. We appreciate your feedback and support!
Ken Wood
2 years ago
I learned to trade options and make adjustments to trades moving against my expectations. I very seldom have a loosinng trade now and never for much money. Covered call strategies are truely wealth building.
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