Spot Premium

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Dictionary Says

Definition of 'Spot Premium'

The money an investor pays to a broker in order to purchase a single payment options trading (SPOT) option. With a SPOT option (also called a binary option) the investor chooses the payout he wants and the market conditions he wants to occur in order to receive that payout. The broker then sets a premium for the option based on the probability of the investor’s predictions occurring.

Investopedia Says

Investopedia explains 'Spot Premium'

The spot premium is usually a percentage of the payout. After the broker sets the premium, the investor can choose to go ahead and buy the option if she is satisfied with the price, or to decline if she thinks the price is too high. If the payout conditions do occur, the investor collects his payout. If they not occur, the investor will lose the spot premium. However, no matter what happens in the market, the most she can lose is the spot premium.

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'Spot Premium'

  • Selecting A Hot SPOT Option

    http://www.investopedia.com/articles/optioninvestor/08/spot-options-investing.asp
    ... If an investor writes an option and does not like the premium quote, there is no
    obligation to buy the option. However, once a SPOT option has been purchased ...

  • Using Options Tools To Trade Foreign-Exchange Spot

    http://www.investopedia.com/articles/optioninvestor/05/022305.asp
    ... thus he or she loses money on the hedges, in theory the exact same amount earned
    in options premium through the sales. Why Is Gamma Important for Spot Traders? ...

  • Uncover The Next Real Estate Hot Spot

    http://www.investopedia.com/articles/pf/07/land_speculation.asp
    Uncover The Next Real Estate Hot Spot. ... In fact, areas that are seen as "hot spots"
    generally sell land at a premium long before the developers will ever set ...

  • CFA Level 1 Study Guide - Portfolio Management - The Risk Premium ...

    http://www.investopedia.com/exam-guide/cfa-level-1/portfolio-management/risk-premium.asp
    ... 5.10 Spread Calculations; 5.11 Spot Market Calculations; 5.12 Forward Market
    Calculations; 5.13 Interest Applications; 5.14 Foreign ...

  • Getting Started In Forex Options

    http://www.investopedia.com/articles/trading/04/101304.asp
    ... order would look something like this: Buy: EUR put/USD call Strike price: 1.2900
    Expiration: 2 March 2010 Premium: 10 USD pips Cash (spot) reference: 1.3000 ...

  • Combining Forex Spot And Futures Transactions

    http://www.investopedia.com/articles/forex/08/forex-spot-futures-options.asp
    ... Because an option's loss is limited to the amount invested, the spot trader's
    risk exposure never exceeds the premium's value. This ...

  • Series 7 Study Guide - Derivatives - Graphical Interpretations for ...

    http://www.investopedia.com/exam-guide/series-7/derivatives/long-puts.asp
    ... example, let's say it is 1 MNO May 100 put @ 3; so essentially the spot rate for
    the stock has to sink below $97 ($100 strike price minus $3 premium) to be in ...

  • CFA Level 1 Study Guide - Global Economic Analysis - Forward ...

    http://www.investopedia.com/exam-guide/cfa-level-1/global-economic-analysis/forward-market.asp
    ... 5.10 Spread Calculations; 5.11 Spot Market Calculations; 5.12 Forward Market
    Calculations; 5.13 Interest Applications; 5.14 Foreign ...

  • Using Interest Rate Parity To Trade Forex

    http://www.investopedia.com/articles/forex/08/interes-rate-parity.asp
    ... If this difference (forward rate – spot rate) is positive, it is known as a forward
    premium; a negative difference is termed a forward discount. ...

  • Investopedia

    http://www.investopedia.com/ask/ViewFAQPrintable.aspx?url=%2fask%2fanswers%2fforex%2fforeign-currency-option-trading.asp
    ... option. SPOT options have a higher premium cost compared to traditional
    options, but they are easier to set and execute. A currency ...

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