Does the Option Premium Have a Theoretical Maximum? ⎊ Path

Does the Option Premium Have a Theoretical Maximum?

The option premium does not have a theoretical maximum, particularly for a call option. Since the underlying asset's price can theoretically rise indefinitely, the intrinsic value and thus the option premium can also increase without limit.

The premium for a put option is capped by the strike price.

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Glossar

Option Premium

Cost ⎊ The Option Premium represents the initial cost paid by the buyer to acquire the right conveyed by the contract, functioning as the price for risk transfer.

Theoretical Maximum

Potential ⎊ The theoretical maximum, within cryptocurrency derivatives, represents an idealized price or return achievable under perfectly efficient market conditions and complete information ⎊ a benchmark rarely, if ever, attained in practice.