Call Premium

What is 'Call Premium'

Call premium is the dollar amount over the par value of a callable fixed-income debt security that is given to holders when the security is called by the issuer.

2. The amount the purchaser of a call option must pay to the writer.

BREAKING DOWN 'Call Premium'

1. The call premium is somewhat of a penalty paid by the issuer to the bondholders for the early redemption.

2. In order to receive the rights associated with a call option, the premium must be paid to the seller.