Glossary
- Paasche index
- Par value
- Partial execution
- Participation certificates
- Pension fund
- Peoples share
- Performance evaluation
- Performance index
- Physical delivery (warrants)
- Placement
- Placement volume
- Pool factor
- Portfolio
- Practise
- Preferred shares
- Premium
- Premium (warrant)
- Premium Margin
- Price addendum
- Price category
- Price details
- Price index
- Price sensitivity
- Price-cashflow-ratio
- Price-earnings ratio
- Price-to-book-ratio
- Primary market
- Prime All Share
- Prime Standard
- Principle of highest volume transacted
- Private placement (PP)
- Proprietary trading
- Prospectus
- Put warrant
Premium Margin
Security deposit that an option writer pays to cover the potential loss that he would incur if the position were liquidated at the daily closing price. Premium margin is calculated on a daily basis.
Premium margin is calculated daily for all options whose option premium has been paid in full by the purchaser. If a change in the price of the underlying security results in an increase in the cost of liquidating the position, the option writer is obliged to deposit additional premium margin. The option holder is not required to put up margin because in purchasing the option he has acquired the right, and not the obligation, to exercise the option. The maximum risk for the option holder is the loss of the option premium.
Premium margin is not required for options on futures because the profits and losses that arise from these positions are netted on a daily basis.
Our glossary explains important financial terms and should not leave any questions unanswered. However, if you are missing a definition, please write to us at redaktion@deutsche-boerse.com. We will then include the term if possible.
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