What is 'option premium' in SAP FIN-FSCM-TRM-TM - Transaction Manager?

option premium - Overview

• Component: FIN-FSCM-TRM-TM

• Component Name: Transaction Manager

• Description: The price paid for an option upon conclusion of the contract.

option premium - Details

• 
  Key Concepts: 
  Option Premium is a term used in the SAP Transaction Manager (FIN-FSCM-TRM-TM) component. It is the amount of money paid by a buyer to a seller for the right to buy or sell an asset at a predetermined price on or before a certain date. The option premium is determined by the market conditions and the terms of the option contract. 
  
  How to use it: 
  In SAP Transaction Manager, the option premium is used to calculate the cost of an option contract. The cost of an option contract is calculated by adding the option premium to the cost of the underlying asset. This cost is then used to determine the total cost of the transaction. 
  
  Tips & Tricks: 
  When calculating the cost of an option contract, it is important to consider both the option premium and the cost of the underlying asset. This will ensure that you are accurately calculating the total cost of the transaction. 
  
  Related Information: 
  Option premiums are also used in other financial instruments such as futures and swaps. Understanding how option premiums work can help you better understand these other financial instruments and how they can be used in your transactions.