Extrinsic value is made up of implied volatility and time value. The further out in time we go, the more time-value is associated with extrinsic value. With super high IV environments though, we can clearly see a higher attribution to implied volatility value in terms of overall extrinsic value in the near-term cycles.
Tune in to see how this can impact short premium trades, and why this helps us absorb directional moves against us with OTM short premium trades.
Live Q&A as well!
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