Option premium

Option premium is the price paid for an option contract. On a flow tape it is the dollar value of one execution: price per share multiplied by the number of contracts and by the contract multiplier. It measures money exchanged on that print, not profit, risk or delta exposure.

Senzoukria · Glossary · Updated September 2026

The formula and a worked example

Premium = execution price × contracts × contract multiplier. For standard US equity and ETF options the multiplier is 100, so a contract quoted at $2.50 costs $250. Two hundred contracts at that price represent $50,000 of premium. Index options and adjusted contracts can carry different multipliers, and futures options use the futures contract's own multiplier; the value on the print is only right when the multiplier is right.

Premium decomposes into intrinsic value (how far in the money the option is) and time value (everything else, driven by time to expiry and implied volatility). A deep in-the-money option's premium is mostly intrinsic; an out-of-the-money option's premium is entirely time value.

Premium on a flow tape

  • Per-print premium is the exact dollar amount of that execution, given a correct multiplier.
  • Session totals split by call and put, or by bought and sold, are sums of per-print premiums and inherit every classification error in the side labels.
  • A latest quote multiplied by cumulative volume is an estimate of premium, not the sum of what was actually paid; prices moved between the prints.
  • Premium says nothing about the trader's net position: a $50,000 call purchase may be paired with a stock sale, a put purchase or a call sale at another strike.

Premium is not exposure

Gamma exposure and delta exposure are computed from Greeks and open interest, not from premium. Two trades with identical premium can carry very different sensitivity to the underlying, depending on strike and expiry. Comparing a premium total with a GEX figure mixes dollars paid with a modeled hedging quantity; they belong to different questions.

In Senzoukria

The Option Flow module shows a Premium column for each print and a header that sums the session into Put / Call premium, Buy / Sell flow and Total premium, plus a "Where the premium is landing" concentration view by strike. The Premium filter accepts thresholds of $10K, $50K, $100K and $500K, and the GOLDEN tag applies to a sweep whose grouped premium reaches $500K. The site's /flow page demonstrates the same fields on generated prints with a premium-balance slider; the demonstration is explicitly simulated and is not evidence of live coverage. Live prints come from the options source the user configures and carry its delay.

Common mistakes

  • Applying a multiplier of 100 to an index or adjusted contract that uses a different one.
  • Reading call premium minus put premium as the market's net position.
  • Confusing premium with the maximum loss of a position that includes short legs.
  • Comparing premium totals from a delayed feed with real-time underlying prices.

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Frequently asked questions

How is option premium calculated on a trade?
Multiply the execution price by the number of contracts and by the contract multiplier. With a multiplier of 100, 200 contracts at $2.50 give $50,000. The multiplier must match the contract; adjusted and index contracts can differ from 100.
Does high premium mean a big bet on direction?
It means a large amount of money changed hands on that print. The position behind it may be a hedge, a spread leg or a closing trade, and the trader's exposure to the underlying depends on strike and expiry, not on the premium figure. Premium selects prints to investigate; it does not settle the question.
Why does a scanner's premium total differ from the sum of the prints?
Some scanners estimate premium from a recent quote times cumulative volume instead of summing each execution. Others apply a default multiplier to every contract. Both shortcuts drift from the actual dollars exchanged. Check which method a tool uses before comparing totals.

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