Intrinsic Value and Extrinsic Value | Options Trading For Beginners



Every option's price consists of the sum of its intrinsic value and extrinsic value. LINK TO WRITTEN VERSION: https://www.projectoption.com/options-trading-basics/intrinsic-extrinsic-value -- A call's intrinsic value is the difference between the stock price and the call's strike price (when the call is in-the-money). A put's intrinsic value is the difference between the put's strike price and the stock price (when the put is in-the-money). An option's extrinsic value is any value in the option's price that exceeds its intrinsic value. Extrinsic value is sometimes referred to as "time value," and can be conceptualized as the value associated with the potential for that option to become valuable before expiration. Additionally, we've included four visualizations of real call and put examples to demonstrate how intrinsic and extrinsic value change relative to shifts in the stock price. Lastly, we discuss the factors that determine how much extrinsic value an option has. Get an Extensive Options Trading Research Report Delivered to Your Inbox: https://www.projectoption.com/options-trading-research Subscribe to Our Newsletter! http://eepurl.com/ctvR6P Subscribe to Our Channel: https://www.youtube.com/channel/UCYOHtOzMZGwXBLZX1Ltf78g?sub_confirmation=1 Don't know what the benefits of trading options are? Check out this video: https://www.youtube.com/watch?v=sSTGci7r2YY Learn Options Trading Basics: https://www.projectoption.com/options-trading-basics Learn Options Trading Strategies: https://www.projectoption.com/options-trading-strategies Learn About Option Greeks: https://www.projectoption.com/option-greeks Learn About Implied Volatility: https://www.projectoption.com/implied-volatility Music: Sophomore Makeout - Silent Partner: https://youtu.be/g2HzEvU1roY

Comments


    Additional Information:

    Visibility: 172

    Duration: 17m 7s

    Rating: 2