STC S7 Greenlight 2 Practice Exam 2025 – Your All-in-One Guide to Exam Success!

Question: 1 / 400

All of the following are fixed by the exchange on which an option contract trades, EXCEPT?

Strike price

Expiration date

Premium

The premium of an option contract is not fixed by the exchange where the contract trades; rather, it is determined by the market forces of supply and demand. The premium is the price that a buyer pays to purchase the option and is influenced by various factors, including the underlying asset's price, volatility, time until expiration, and overall market conditions.

In contrast, the strike price, expiration date, and contract size are standardized terms established by the exchange. They are predetermined for each option contract and do not change based on market activity or negotiability between parties. Hence, while the market fluctuations affect the premium, the other attributes of the contract are set by the exchange, making the premium the option that is not fixed by the exchange.

Get further explanation with Examzify DeepDiveBeta

Contract size

Next Question

Report this question

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy