Call Premium

When you buy a call option, you are paying for the right to sell a share at a certain price, which protects you in case the price suddenly starts to tank. The money you pay for this option is the call premium.

So say you are holding a stock at $15 per share. You buy a call option to sell at $13 a share, with an expiration date 30 days from now. You now have the right, but not the obligation, to sell the stock at $13 if you want to by the expiration date.

If the stock stays above $13, you're not going to exercise the option. You'll just let it expire. But if it turns out the CEO was making up most of the company's clients and the stock falls to $5 a share, you have protection in place. You can exercise your option and sell at $13. Say you paid $2 for that option. That $2 is the call premium.