A term with a number of meanings. In financial markets a security might be said to be trading 'at a premium' when it is trading above its usual price. In the capital markets it is the amount by which a bond sells above par value. In foreign exchange markets it is used to describe the margin by which the forward rate is higher than the spot rate, the forward premium. In commodity markets it is the additional price paid by a buyer if the grade delivered is of better quality than that specified in the original contract. It is also the price paid for taking out an option. Premium is the opposite of discount. Premium can also simply mean the price paid to purchase a financial asset.