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Product Premium

Gross option value, deductions and the user's net premium.

#Gross premium

Gross premium is the price of the short-call exposure before execution and settlement costs. It depends on strike, expiry, volatility, rates, distributions, liquidity and size.

#Net premium

Net premium = gross premium − execution cost − fees − settlement cost

A quote should state amount, unit, timestamp, strike, expiry, size and every deduction. Gross premium is not realized yield.

#Premium is paired with an obligation

Receipt at entry does not complete the trade. Strategy PnL includes the Stock Token move, short-call payoff, basis, funding where applicable, execution and exit costs.

ARRANGE Documentation