How Does the Concept of “Net Premium” Apply to Multi-Leg RFQ Quotes?

The net premium is the single, all-inclusive price quoted for an entire multi-leg options strategy in an RFQ. It represents the total credit or debit received or paid for all the individual option legs combined.

The liquidity provider calculates the net premium based on the fair value of all legs, their risk, and their desired spread. The initiator accepts or rejects this single net price, ensuring they know the final cost or proceeds upfront.