1: premium definition
2: how premium works
3: premium vs standard
4: example of premium
Opening information:
Premium means the amount of things acquired or paid more than a total figure or rate.
So now let’s have a look at what is a premium, how the premium works in the stock market for all Corporate Industries, and what is the difference between a premium and a standard, finally one clear example of the premium.
1: premium definition
Balus is a music business provider that provides multiple levels of songs in different languages for their song consumers.
To use his business music platforms he had three kinds of membership levels, each membership had a different level of benefits for their customers.
However each of the members does not have a difference in business activities, instead, it has distinct benefits on basic, standard, and advanced status music consumption.
Basic membership shows that anyone who chooses to basic, which allowed to consume their native language music alone.
Standard level membership demonstrates that those who bought intermediate, are allowed to listen to multiple levels of language at any time.
Then advanced level membership would have a chance to provide a license to download any amount and kind of language songs to store and hear whenever they want.
Here the advanced level membership is so costly and charges money more than a standard price for memberships, for this reason, the advanced level membership is characterized as a premium membership of the Balus business.
Now let’s dive into how the premium works in the public for all the speculators and investors.
2: how premium works
Premium is the amount but doesn’t represent any single amount number or physical thing as a premium, instead, it’s a concept of paying some amount more than a standard amount.
Therefore this premium is not only applied to one amount despite any amount that is paid above the standard price, which money is considered as prpremiumIf the options trader bought the call options for any of the stock securities, then that call option would be bought based on some amount without any security-determined price, which that amount is known as premium money in the public market.
Because call options are purchased with the intention of trade above the amount of stock price, the stock price is a standard amount, when that certain stock is purchased more than that stock price, then that price is called a premium.
Not any amount price is fixed for the call options, instead, any amount paid from one dollar to any amount of dollars becomes a premium for that call option.
In the call option, some traders thought paying the amount more than the share price is a premium yes it is, but paying an amount at least 1 dollar more than the share price without purchasing shares is also elaborate a premium.
In the option market, the premiums are paid without purchasing real shares in the public market, but in a future market, premiums are paid by including the purchasing of shares.
Because option market contracts are created based on the choice to buy shares or not, but future market contracts are created based on the no choice to not purchase the shares, the futures traders must need to purchase the shares based on their contract.
Here we look only for stock securities, any securities that are traded using this same idea contract, then any amount which is paid above the market price is considered as a premium.
Most people’s confused about the premium and standard, so now let’s jump into know the key difference in it anyway.
3: premium vs standard
The difference between the premium and standard are, premium is considered as a amount which are paid for acquiring the full service and deal of something in advance.
And standard doesn’t rely on any kind of amount above intermediate or low , which that standard amount consider what normally people’s of consumer prefer to use it.
So the key difference between the premium and standard is if the payment is made larger than the fixed or market price of the item, then it’s considered it’s premium, when it’s not it would be called standard, let’s seen into one clear example about the premium anyway.
4: example of premium
Say that your friend had purchased two kind of investment, one is from the stock A company equity, which the purchase made by the market price.
And another investment would be made by Paying some advance amount for the contract to purchase the stock F at 2 year later in future time.
Here the stock A is purchased using the standard amount and stock F is purchased by the premium amount of money.