What is net premium?Net Premium
Premium paid on long legs minus premium received on short legs; paying net is a debit, receiving net is a credit.
Learn “net premium” in an animated lesson
- Advanced Option StrategiesIron Condors: Betting on a Range
Sell a strangle to collect premium, then buy protection further out on each side. Risk is capped, and you make money if the stock stays in the range.
- Advanced Option StrategiesStraddles and Strangles: Betting on a Big Move
Not sure whether it'll go up or down, only that it'll move a lot? Buy a call and a put together. Same strike is a straddle; different strikes is a strangle.
- Advanced Option StrategiesVertical Spreads: Bull and Bear Spreads
Buy one option and sell another of the same type at a further strike: it costs less, and both the gain and the loss are capped.
Related terms
See how “net premium” works for yourself with an animation you can drag and play.
Go to “Iron Condors: Betting on a Range”