Option Premiums
The price of an option, made of intrinsic value (the in-the-money amount) plus time value (what remains); quoted per share, so a 3.50 premium costs $350 per contract.
Intrinsic value never goes negative — an out-of-the-money option simply has none. More time to expiration and higher volatility both raise time value, the two drivers the SIE expects you to know.