# Premium calculation We define the dependency between [`CVI`](https://cvi.finance/) and the expected IL percentage for the next 14, 30 and 60 days as a simple quadratic parabola fitted to the historical data. **Impermanent loss protection price formula is defined as:** **(a\* (Xt-Xo)^2+C)\*P** where: a - Stands for the coefficient of the fitted model, and describes the quadratic parabola slope. Xt - Stands for the level of [CVI](https://cvi.finance/) at the time of IL protection purchase. Xo - Stands for the level of [CVI](https://cvi.finance/) at the lowest expected IL percentage. C - Stands for the IL percentage relative to X0. P - Stands for the premium charged, calculated according to the collateral ratio, this variant is designed to create an equilibrium between the liquidity pool value that is provided to the IL protection and the value covered by the IL protection. For example: We defined at 15% the max IL protection cap, which covers up to 99.7% of IL percentage according to historical data. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://doc.armadillo.is/more-information/premium-calculation.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.