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How Is the Premium Payment Structured in a Typical Options Trade?

The buyer pays the full premium to the seller upfront at execution, representing the buyer's maximum loss.
Greeks.Live22.11.25

How Is the Premium Payment Structured in a Typical Options Trade?

In a typical options trade, the buyer pays the full premium to the seller upfront at the time of execution. This payment is the maximum loss for the buyer.

The premium is immediately transferred and is not subject to daily marking-to-market. The premium is the price of the option contract.

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