A cost of options contract is the total amount an investor pays for the contractual rights to buy or sell a specific asset at a predetermined price in the future. This lump sum payment consists of two components: the premium, which is the amount that the investor pays for the option itself, and intrinsic value, which reflects the difference between the strike price of the option and the current market value of the underlying asset. The cost of an options contract can fluctuate depending on the level of risk associated with the underlying asset as well as changes in market conditions. By understanding the costs associated with options contracts, investors can make informed decisions about their investments and maximize their returns.