The price you pay upfront to buy an option contract. This is the cost of purchasing the right to buy or sell a stock at a specific price, and it is non-refundable even if you choose not to exercise the option.
A call option on Tesla has a premium of $3 per share. Since one option contract represents 100 shares, you would pay $300 total to buy that contract. If you never exercise the option and it expires worthless, you lose the entire $300 premium you paid.
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