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Contingent Premium Option
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Contingent Premium vs. Standard Call Option Value at Expiration A contract for which the buyer of the option pays no premium up front but agrees to pay a predetermined premium if the option has any value at expiration. The premium for a contingent premium option will exceed that of an ordinary option, but the premium will be paid only if the option is in the money at expiration. Also called Capitalized Option, Cash On Delivery (COD) Option, Collect On Delivery (COD) Option, Pay on Exercise Option. Compare with Contingent Payout Option, Deferred Premium Option. See also Boston Option (2), Contingent Cap, Contingent Premium Swaption, Exotic Options, Pay Later Option (PLO).
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