premium income

premium income definition - business

premium income

Fees in the form of premiums received by an investor who sells short a call option or put option. For example, an investor holding shares of BP can earn premium income by writing covered call options that allow the buyer of the calls the right to purchase the option writer's BP shares at a fixed price until a stated date.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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