What Is Option Premium? Meaning & Example

Implied volatility is the market's expectation of future price swings, derived from option prices. Higher implied volatility makes options more expensive.

Theta measures how much an option's value declines each day as expiration approaches, all else equal. This time decay works against option buyers and in favor of sellers.

An option is a contract giving the buyer the right, but not the obligation, to buy or sell an asset at a set price before or on a certain date. Options can be used for income, hedging or speculation.