# Option Premium

*Derivatives & Options — Finicade finance glossary*

The price you pay to buy an option — its whole cost, and the most a buyer can lose. It splits into intrinsic value (real, in-the-money worth) and time value (what you pay for the chance things move your way).

**Also known as:** option price

**Related terms:** [Option](https://finicade.com/glossary/option), [Intrinsic Value](https://finicade.com/glossary/intrinsic-value), [Time Value](https://finicade.com/glossary/time-value), [Implied Volatility](https://finicade.com/glossary/implied-volatility)

**Taught in:** Hull Street — How Options Work

Source: https://finicade.com/glossary/premium