Can someone explain why premium is high at times and almost nonexistent at others? Assuming this is based on volume on contracts or volume of actual instrument? Also, wanted to ask how bid/offer works seeing that at times some are far apart and others they are very close. Noticed also on some instruments that the bid/offer usually has wider gap. See this alot on Dax Thanks
Premium is higher when there is or has been more expected movement. Ie before a news event or when markets have moved a lot.
Bid offer will vary by instrument. The more traders trading it and the more volume on it. (Similar but not the same) the narrower it will be. On any market: Forex, futures, stocks, options, binaries, and spreads. Remember, options vanilla or binaries or spreads, are all option derivatives and usually have a wider bid offer than the underlying.
