The cost to purchase an option contract is called the:
A) strike price.
B) rights price.
C) premium.
D) exercise price.
E) payoff price.

Question

Quizplus · Accepted Answer

The cost to purchase an option contract is called the premium. The strike price is the price at which the underlying asset can be bought or sold, the exercise price is another term for the strike price, and the payoff price refers to the price of the underlying asset at the expiration date of the option contract. The term "rights price" is not commonly used in options trading. Therefore, the correct answer is C- premium.

The Cost to Purchase an Option Contract Is Called The