Call Premium
1. The dollar amount over the par value of a callable fixed-income debt security that is given to holders when the security is called by the issuer.
2. The amount the purchaser of a call option must pay to the writer.
Investopedia Commentary
1. The call premium is somewhat of a penalty paid by the issuer to the bondholders for the early redemption.
2. In order to receive the rights associated with a call option, the premium must be paid to the seller.
Related Links
Options Basics Tutorial
Call Features: Don't Get Caught Off Guard
Advanced Bond Concepts
See also: Callable Bond, Conversion, Extraordinary Redemption, Forced Conversion, Indenture, Make Whole Call, Refinance, Yield to Call
Also spelled: called premium
call premium