After digging into Intrinsic Value and Extrinsic Value a bit in Episode #2, we now want to dive deeper into Extrinsic Value. To do that, we begin with Intrinsic Value, which we learn is completely controlled by the “moneyness” of the option. From there, we can make the leap into appreciating the impact that both time and volatility have on extrinsic value.
At tastytrade, Extrinsic Value alone is arguably the most important concept across all of our strategies.
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