Trade Logic Unlocked

Extrinsic Value Lite

Trade Logic Unlocked

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

As tastytraders, we sell out-of-the-money premium as the basis behind our core trading strategy. Doing this brings with it a host of benefits, from positive theta to higher probabilities. But interestingly, another byproduct of selling OTM premium is that this premium is made up of 100% extrinsic value. Given this, what is a reasonable expectation for the amount of this extrinsic value that we can capture?

Enter “Extrinsic Value Lite”.

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