Special value. Shares or securities bought at a premium are bought for more than their par or face value. In the context of options, the premium is the cost of buying an option; it represents the maximum amount the option-buyer can lose (and is likened to an insurance premium) and is income for the option seller. In foreign exchange, a currency trading at a premium is worth more in the forward market than in the spot market. In insurance, the premium is the price paid (usually in regular instalments) by a policyholder to the insurance company to maintain an insurance policy. Premium is also the opposite of discount. See also: discount, insurance, par value.
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